HG MARKETS:

On Wednesday, WTI crude futures eased to approximately $82 per barrel, stepping back marginally from recent peaks as investors opted to lock in profits following a robust rally in oil prices. Market sentiment was cautious ahead of the US Federal Reserve’s interest rate decision. Additionally, a strengthening dollar exerted downward pressure on oil prices, increasing the cost of oil for buyers using other currencies and dampening demand. . Brent crude futures for May slipped 62 cents, or 0.71%, to $86.76 a barrel. U.S. West Texas Intermediate futures for April delivery, expiring on Wednesday’s settlement, declined 71 cents, or 0.85%, to $82.76 a barrel. The more active May WTI contract traded at $82.11 a barrel, down 62 cents, or 0.75%.

In other news, industry data revealed that US crude inventories decreased by 1.519 million barrels last week, a deceleration from the previous week’s drop of 5.521 million barrels. On Tuesday, oil prices surged to nearly five-month highs due to Ukrainian drone attacks on Russian refineries, which raised concerns about supply disruptions. Iraq also disclosed plans to curtail its crude exports to 3.3 million barrels per day in the coming months to comply with its OPEC+ production quota. Furthermore, Saudi Arabia registered a second consecutive monthly decline in crude exports.

Investors are keenly anticipating the Federal Reserve’s announcement for signals on its interest rate trajectory for the year. While a cut in borrowing costs is not expected, updated economic projections could indicate fewer interest rate cuts and a delayed start to policy easing compared to previous expectations. The U.S. dollar index strengthened ahead of the Fed decision, potentially dampening oil demand from buyers in countries using other currencies. Profit-taking may have contributed to the downside movement, according to Auckland-based independent analyst Tina Teng. She noted that the recent price rally was supported by an improved demand outlook and signs of supply reductions.

In the previous session, Brent settled at its highest level since October 31, at $87.38 a barrel, while WTI reached its highest point since October 27 at $83.47. The recent surge in crude prices was partly driven by Ukrainian attacks on Russian refining assets, which raised concerns about crude and fuel supply disruptions. ING analyst Warren Patterson highlighted the potential for Russian producers to reduce supply if export capacity is constrained due to prolonged disruptions.

Investors are also awaiting official stockpile data from the U.S. Energy Information Administration. The American Petroleum Institute reported declines in U.S. crude oil and gasoline inventories last week, while distillate inventories increased, according to sources.