Oil prices fall on inventory report and Fed

Oil prices are edging lower today. The decline follows a report showing that US inventories fell less than expected. Investors are also cautious ahead of an expected interest rate hike by the US central bank (the Fed) today.

At around 17:15 CEST, the price of North Sea Brent crude was down 0.1 percent at 83.6 dollars per barrel. The price of US light crude, WTI, was down 0.2 percent at 79.48 dollars per barrel at the same time. On Tuesday, oil prices rose to their highest level in three months.

According to data from the US Energy Information Administration (EIA), crude oil inventories fell by 600.000 barrels last week. Analysts had expected inventories to fall by as much as 2,35 million barrels. Gasoline and diesel inventories also fell by less than expected.

Oil prices have been rising for four weeks. The gains are driven by concerns about supplies linked to production cuts in Saudi Arabia and Russia, as well as promises by Chinese authorities to support the world's second-largest economy. This could mean higher demand, as China is the world's second-largest oil consumer.

Markets expect Saudi Arabia to continue restricting production in September. Reuters, citing sources, reported that Russia is expected to sharply increase oil loadings in September, ending a steep reduction in exports.

“The market will continue to move between constraints on global supply and concerns about slowing demand as a result of a slowdown in the global economy,” said Hiroyuki Kikukawa, president of NS Trading, a division of Nissan Securities.

Investors were also adjusting their positions ahead of the Fed's interest rate decision today. The Fed's monetary policy committee is widely expected to raise its key interest rate by a quarter of a percentage point at the end of its two-day meeting today.

Oil prices in dollars per barrel (about 159 litres):