Shafaq News/ Oil prices traded in anarrow range early on Wednesday as investors remained cautious ahead of anexpected interest rate cut by the U.S. Federal Reserve, while weighing up thepotential supply impact of tighter sanctions on Russia.
Brent futures inched up 1 cent at$73.20 a barrel at 0420 GMT, while U.S. West Texas Intermediate crude rose 1cent to $70.08 a barrel.
The market is watching out for clueson interest rate moves for 2025 following the Federal Open Market Committee's(FOMC) meeting, which ends later on Wednesday, analysts said.
"Additional sanctions from theWest may limit some losses in today's session, but a cautious tone persists inthe lead-up to the FOMC meeting," said Yeap Jun Rong, market strategist atIG.
"Looking ahead, oil prices arelikely to remain constrained within their current range, with subdued priceaction expected to persist through the end of the year," Yeap added.
The Fed on Wednesday is widelyexpected to cut interest rates for the third time since its policy easing cyclebegan.
"Projections for rate cuts in2025 are being second-guessed, especially with Trump planning a comeback onJanuary 20," said Priyanka Sachdeva, senior market analyst with PhillipNova.
"There is a prevailingnarrative that Trump's policies may lead to inflation, which, coupled withconcerns about potential interference with the Federal Reserve's autonomy, iscausing oil investors to remain cautious," she added.
Lower rates decrease borrowingcosts, which can boost economic growth and demand for oil.
Meanwhile, the European Union onTuesday adopted a 15th package of sanctions against Russia over its invasion ofUkraine, adding an additional 33 vessels from Russia's shadow fleet used fortransporting crude or petroleum products. Britain also sanctioned 20 ships forcarrying illicit Russian oil.
The fresh sanctions could stokefurther oil price volatility though so far they have not succeeded in shuttingRussia out of the global oil trade.
In the U.S., American PetroleumInstitute data on Tuesday showed that crude stocks fell by 4.69 million barrelsin the week ended Dec. 13, a source said. Gasoline inventories rose by 2.45million barrels, and distillate stocks rose by 744,000 barrels, according tothe source.
Analysts projected U.S. energy firmspulled about 1.6 million barrels of crude from storage during the week endedDec. 13, according to a Reuters poll on Tuesday.
The U.S. Energy InformationAdministration will release its oil storage data on Wednesday.
(REUTERS)