Crude oil steady ahead of US Fed rate decision

Oil prices traded in a narrow range on Wednesday as investors stayed cautious ahead of a potential interest rate cut by the US Federal Reserve and its projections for 2025, while a draw in US crude inventories offered some support, reports Reuters.

Brent futures rose 42 cents, or 0.57 per cent, to $73.61 a barrel at 1201 GMT, while US West Texas Intermediate crude climbed 47 cents, or 0.67 per cent, to $70.55 a barrel. The Fed is expected to cut rates by a quarter point, but to signal a cautious approach to loosening monetary policy next year.

"A quarter-point cut itself is unlikely to shake markets much. Investors may focus more on hints and clues on how likely a January pause is, as well as on how many rate cuts policymakers are contemplating throughout 2025," said Charalampos Pissouros, senior investment analyst at brokerage XM.

"Oil prices ought to see more of a reaction to the crude inventory draw seen in the API data overnight... however, such is the diverting power of central bank rate decisions that investors in all of the trading mediums are taking a very light touch to proceedings" said John Evans, analyst with oil broker PVM.

In the US, American Petroleum Institute data on Tuesday showed that crude stocks fell by 4.69 million barrels in the week ended Dec. 13, a source said. Gasoline inventories rose by 2.45 million barrels, and distillate stocks rose by 744,000 barrels, according to the source.