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Oil slips 2pc from highs ahead of Fed decision

News Desk
Thursday, Mar 21, 2024

NEW YORK: Oil prices fell on Wednesday after hitting multi-month highs in the previous session, as investors braced for the U.S. Federal Reserve's interest rate policy announcement later in the day.

Brent crude futures for May were down $1.39, or 1.59 percent, at $85.99 a barrel by 1605 GMT. U.S. West Texas Intermediate futures for April delivery , which expire on Wednesday's settlement, fell $1.80, or 2.16 percent, to $81.67.

The more active May WTI contract was at $81.22 a barrel, down $1.51 or 1.83 percent. Brent had settled at its highest since Oct. 31 in the previous session at $87.38 a barrel, while WTI hit its highest since Oct. 27 at $83.47.

The markets are concerned about the Federal Reserve's rate decision, said Tim Snyder, economist at Matador Economics. "Interest rates have not fallen off like one would have expected," Snyder said.

The Fed will announce its decision at 2 pm EDT on Wednesday. The Fed is not predicted to cut borrowing costs, but fresh economic projections could signal fewer interest rate cuts and a later start to the policy easing than previously expected.

The U.S. dollar index edged higher ahead of the Fed decision, which can also dent oil demand for buyers in countries using other currencies. The U.S. Energy Information Administration (EIA) said crude oil stockpiles fell unexpectedly last week as exports rose and refiners continued to increase activity.