Oil prices were tentatively higher in Asian markets on Wednesday, with investors awaiting meetings of major central banks, including the Fed, and watching closely the dramatic developments in the Middle East.
Brent futures for January delivery were up 36 cents, or 0.4%, at $85.38 a barrel at 3:40 a.m. ET, after falling $1.33 in yesterday’s session.
U.S. West Texas Intermediate crude futures were up 28 cents, or 0.3%, at $81.30 a barrel, after losing $1.29 on Tuesday.
Crude prices are holding steady ahead of the Fed’s interest rate announcements, while geopolitical risks also appear to support a stabilizing move, offsetting pressure from rising US crude inventories, OANDA senior market analyst Edward Moya said.
Crude oil inventories rose by about 1.3 million barrels last week, while fuel stocks fell by about 360,000 barrels, according to market sources citing data from the American Petroleum Institute on Tuesday.
Interest rate hikes aimed at reducing inflation could slow economic growth and reduce oil demand, while interest rate cuts to stimulate spending could increase oil consumption.
The Fed, whose announcements are due today, is expected to keep interest rates steady, according to a CME Fedwatch poll.
On European soil, October inflation in the euro zone was the lowest in two years, falling to 2.9% from 4.3% in September, according to Eurostat’s first estimate, reinforcing expectations that the ECB will not raise interest rates soon.
Meanwhile, analysts at Goldman Sachs predict that Brent is set to reach $100 as inventories fall.