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Update: Oil falls ahead of Fed decision
[LONDON] Oil prices fell on Thursday as jittery investors awaited a key interest rate decision from the US Federal Reserve.
US benchmark West Texas Intermediate (WTI) for delivery in October dropped 58 US cents to US$46.57 a barrel from Wednesday's close.
Brent North Sea crude for November shed 60 US cents to stand at US$49.15 a barrel in London midday deals.
Prices were lower as traders took profits after crude futures had soared Wednesday.
WTI surged almost six per cent and Brent jumped more than four percent after the US Department of Energy revealed a weekly drop of 2.1 million barrels in crude inventories.
That included a 1.9 million-barrel decline at the Cushing, Oklahoma trading hub, indicating stronger demand in the world's top oil consumer. The report also said US oil production fell for the sixth straight week.
"For the oil market, the fact that US oil production was down once again may perhaps be even more relevant than the decline in stocks," said Commerzbank analyst Carsten Fritsch.
"This would appear to prove Opec's strategy correct, namely that low oil prices would prompt shale oil producers to abandon production. In fact, this trend may well even accelerate in the near future." World oil prices have roughly halved in value since a year ago, plagued by a global supply glut caused largely by cheaper production of US oil following extraction from shale rock.
Attention is now focused on Washington where the Fed will make an announcement on borrowing costs, with analyst opinion split on whether it will begin lift-off of raising rates on Thursday or wait until December.
Fed chief Janet Yellen has said she expects an increase in US interest rates by the end of the year but recent turmoil in global markets caused by concerns about China's economy have complicated policymakers' decision-making.
A rise in US interest rates tends to bolster the dollar, making dollar-priced oil more expensive for holders of weaker currencies, hurting demand.