Oil falls ahead of US Federal Reserve interest rate decision

Oil prices fell on Wednesday ahead of the Federal Reserve’s expected rate hike, but expectations of a decline in US crude inventories and European sanctions on Russian oil limited losses.

Brent crude fell 56 cents, or 0.6 percent, to $ 94.09 a barrel by 1027 GMT, while US West Texas Intermediate crude fell 53 cents, or 0.6 percent, to $ 87.84 a barrel.

And market sources quoted the American Petroleum Institute as saying that US crude oil stocks fell by 6.5 million barrels in the week ending October 28.

In the same period, gasoline stocks fell by 2.6 million barrels, exceeding expectations. Official data is scheduled to be released at 1430 GMT.

The zero-Covid policy in China was a major factor in curbing oil prices, as repeated shutdowns slowed growth and reduced demand for oil in the world’s second largest economy.

An unconfirmed post on social media showed that the Chinese government will study ways to ease Covid-19 restrictions from March 2023, which could increase demand in the world’s second largest oil consumer.

The dollar retreated from Tuesday’s highs, as investors awaited the Federal Reserve’s decision, due at 1800 GMT. Many hope that there will be signs of slower rate hikes in the future.

A weak dollar makes oil cheaper for holders of other currencies.

Potential disruptions from the European Union’s embargo on Russian oil, which takes effect on Dec. 5, could raise prices. The ban, a reaction to Russia’s invasion of Ukraine, will be followed by the halting of imports of Russian petroleum products in February.