Oil Ticks Higher Ahead of Fed Policy Decision, OPEC+ Guidance

Oil edged higher before a Federal Reserve monetary-policy decision and guidance from producer group OPEC and its allies, Bloomberg reported.

West Texas Intermediate rose above $79 a barrel after gaining more than 1% on Tuesday. While the US central bank is expected to deliver another interest-rate hike at Wednesday’s meeting, it’s likely to be just half the size of the 50-basis-point move agreed in December as inflation shows signs of cooling.

Traders will also track any guidance from the Organization of Petroleum Exporting Countries and its allies including Moscow. Delegates predict that output will be held steady at a monitoring meeting on Wednesday ahead of a fresh round of curbs on Russian energy flow that will kick in within days.

Crude capped a third monthly loss in January even amid a wave of optimism that China’s ending of its strict Covid Zero policy will rekindle demand in the world’s largest crude importer. A range of indicators have pointed to increased consumption as mobility and industrial activity start to pick up.

“Oil prices seem to be finding its footing,” said Yeap Jun Rong, market strategist at IG Asia Pte in Singapore. Still, “any hawkish takeaway from the Fed could bring back some downward pressure,” he said.

The industry-funded American Petroleum Institute, meanwhile, reported that US commercial crude inventories expanded by 6.3 million barrels last week, according to people familiar with the figures, as stockpiles of gasoline and diesel also increased. Official figures will be issued later Wednesday.

Amid the market’s crosscurrents, time spreads have fluctuated. The gap between the next two December contracts for global benchmark Brent — a widely-watched metric — was $4.78 a barrel in backwardation. A week ago, the figure was $5.16 a barrel, and it touched a low of $2.19 in December.