Brent fell to over $86 per barrel after reaching its highest since late October. According to sources familiar with the numbers, the American Petroleum Institute said that US oil stockpiles declined by 1.5 million barrels. Petrol inventories were also observed declining, with official figures expected later Wednesday.
The US central bank is anticipated to keep interest rates unchanged for the fifth straight meeting later Wednesday, while officials may hint at when they would be ready to ease. According to Jeff Currie of Carlyle Group LP, if the Fed cuts interest rates in the next months, oil prices would soar much above the current consensus of $70 to $90 per barrel.
The drop on Wednesday follows a recent rally that pulled oil out of a tight trading range that had suppressed volatility in the first few weeks of 2024. The gain has been aided by OPEC+ supply cutbacks and geopolitical dangers, including Ukrainian drone raids on Russian facilities. Earlier this week, China reported broadly good GDP figures, which fueled increases.
“The oil market is in correction mode this morning ahead of the Fed meeting and the release of the weekly oil stocks figures by the EIA later this afternoon,” analysts at brokerage PVM said in a daily note.