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Oil subdued as market on edge over Fed decision on interest rates
[SINGAPORE] Oil prices were subdued in Asia Wednesday as the market awaits a Fed decision on interest rates and stockpiles data from the United States.
US benchmark West Texas Intermediate for October delivery was up 24 cents to US$44.83 and Brent crude for November reversed earlier gains to dip four cents at US$47.71 a barrel in late-morning trade.
Traders' attention is on a meeting Thursday of the US central bank's Federal Open Market Committee to decide on the timing for an interest rate increase.
Some analysts are expecting a rate hike to come this month while others are predicting it to happen in December.
"Opinion is really mixed," said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
"We're seeing the market split on this. At the end of the day we will only know about the results later this week so there's a lot of speculation at the moment." Interest is keen in the oil market on a Fed decision because a raise in the benchmark federal funds rate from zero, where it has been pegged since 2008, could boost the greenback, making dollar-priced crude oil more expensive in other currencies and possibly weighing on demand and prices.
Market watchers are also eyeing the weekly US crude inventories report to be released later Wednesday to gauge demand in the world's top oil consuming nation.
A poll of experts by Bloomberg News showed the consensus estimate is for a gain of 1.75 million barrels in the week to September 4. A build in the inventories reflect softer demand.