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Oil prices edged higher on Wednesday as investors awaited the conclusion of the U.S. Federal Reserve meeting, where a widely expected interest rate cut could signal further monetary easing for 2025. Brent crude climbed by 32 cents, or 0.44%, reaching $73.51 a barrel by early morning, while U.S. West Texas Intermediate crude also rose by 32 cents, or 0.46%, to $70.40 a barrel.
Market participants are closely monitoring the Federal Open Market Committee’s (FOMC) decision, with analysts expecting the Fed to announce its third rate cut since the policy easing cycle began. Lower interest rates reduce borrowing costs, potentially stimulating economic growth and boosting energy demand—a key driver for crude prices.
In Europe, the European Union introduced its 15th sanctions package targeting Russia, imposing restrictions on an additional 33 vessels from the country’s shadow fleet, which is used to transport crude and petroleum products. The U.K. joined in, sanctioning 20 ships accused of carrying illicit Russian oil. While these measures have yet to disrupt Russia’s role in global oil markets significantly, they could introduce new volatility to the energy sector.
The supply side also garnered attention as U.S. crude inventories showed a significant decline. Data from the American Petroleum Institute (API) revealed a drop of 4.69 million barrels in the week ending December 13, surpassing analysts’ expectations of a 1.6-million-barrel decrease, according to a Reuters poll. Meanwhile, gasoline inventories rose by 2.45 million barrels, and distillate stocks increased by 744,000 barrels.
The Energy Information Administration (EIA) is set to release its official storage data later on Wednesday, which could further influence market sentiment.
As the week progresses, the focus remains on the Fed’s policy direction and its implications for economic growth, alongside the ongoing impact of geopolitical developments on global oil supply and demand dynamics.
