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Investors are awaiting the Fed's interest rate decision at 1800
GMT on Wednesday to assess the outlook for economic growth and
fuel demand. The Fed is widely expected to keep interest rates
on hold, but the focus will be on its projected policy path,
which is unclear.
"The oil rally is taking a little break as every trader awaits a
pivotal Fed decision that might tilt the scales of whether the
U.S. economy has a soft or hard landing," said Edward Moya,
senior market analyst at data and analytics firm OANDA.
Global benchmark Brent crude futures fell by $1.46, or 1.55%, to
$92.88 a barrel by 0854 GMT.
U.S. West Texas Intermediate crude futures shed 1.43%, or $1.30,
to $89.90 a barrel. The October WTI contract expires on
Wednesday and the more active November contract was down $1.38,
or 1.53%, to $89.10 a barrel at 0854 GMT.
Prices fell despite U.S. crude oil stockpiles falling last week
by about 5.25 million barrels, according to market sources
citing American Petroleum Institute figures on Tuesday. Analysts
in a Reuters poll had expected a 2.2 million-barrel decline.
"Barring any unpleasant surprise, attention will likely return
to the perceived supply deficit once interest rate decisions are
out of the way and reaching the $100/bbl milestone remains a
not-so-distant possibility," said Tamas Varga, analyst at oil
broker PVM.
"We have nudged up our 12-month ahead Brent forecast from $93 a
barrel to $100 a barrel as we now expect modestly sharper
inventory draws. The key reason is that significantly lower OPEC
supply and higher demand more than offset significantly higher
US supply," said Goldman Sachs analysts in a Wednesday note.
Elsewhere, data from the U.K. showed a surprise drop in
inflation in August, sparking expectations that the Bank of
England could pause its historic run of interest rate hikes as
soon as Thursday. The consumer price index fell by 0.1
percentage points to 6.7%, its lowest since February 2022.
(Reporting by Robert Harvey in London, Yuka Obayashi in Tokyo
and Emily Chow in Singapore; editing by Kim Coghill and Jason
Neely)
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