Crude oil drifts lower ahead of crucial Federal Reserve meeting
Investing.com — Crude oil prices stabilized near three-month highs on Tuesday, as traders waited for news from the Federal Reserve following signs of tighter supplies and promises by Chinese authorities to shore up the world's second-biggest economy.
By 09:30 ET (13.30 GMT), the U.S. crude futures traded 0.2% higher at $78.56 a barrel, while the Brent contract dropped 0.2% to $82.30.
The crude benchmarks have recorded four consecutive weeks of gains, boosted by the announcements near the start of this month from Saudi Arabia and Russia, the world’s biggest oil exporters, of plans to cut an additional combined 1.5 million barrels per day, respectively, from their July production levels.
Also boosting sentiment was the pledge by Beijing to step up economic support for the Chinese economy, the world's second largest and second biggest oil consumer.
“China is key for global oil demand growth this year and the market has been getting increasingly concerned over the weaker-than-expected economic recovery, so any support measures will be helpful in easing some of these concerns,” said analysts at ING, in a note.
However, traders have been reluctant to push the market too much higher Tuesday at the start of the latest two-day policy-setting meeting by the U.S. Federal Reserve.
The market has largely priced in a quarter-point hike from the Fed on Wednesday, so the focus will be on what Fed Chair Jerome Powell has to say about future rate increases amid expectations that this meeting will produce the central bank’s last hike of the year.
Recent optimism that the U.S. economy will survive the Fed’s aggressive monetary tightening without falling into recession has boosted confidence in the crude market.
Ahead of the Fed
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