Crude oil prices were seen trading higher on Wednesday, as the Federal Reserve Open Market Committee (FOMC) is expected to end its two-day meeting today. While investors await a conclusion on what the central bank will decided over its $85 billion monthly asset-purchasing program, a fresh data on US stockpiles is expected to be released from the Energy Information Administration (EIA).
West Texas Intermediate (WTI) for January delivery gained 24 cents to $97.46 per barrel on the New York Mercantile Exchange at the time of writing. At the same time the European benchmark Brent crude for February settlement rose 0.1% higher to $108.59 per barrel on the ICE Futures Europe exchange. Brent crude was at a $10.86 premium to WTI for the same month.
Market participants are expecting to hear an announcement from the Federal Reserve (Fed) Chairman Ben Bernanke after the Federal Reserve’s two-day meeting, on when and whether the central bank would begin to taper its monthly stimulus bond-buying program.
The $85 billion monthly stimulus program has supported the markets and commodity prices, to strengthen the world’s largest economy.
Analysts are expecting tapering to begin following the meeting, due to the improved labour market and the string of positive data which shows the health of the US economy is improving. While some analysts are predicting the central bank will maintain its stimulus till next year to get more evidence that the US economy’s recovery is stable.
The US Inventories report from the Energy Information Administration (EIA) is expected to be released on Wednesday, with forecasts of drop of 2.186 barrels in the latest week.
According to reports from the American Petroleum Institute, crude inventories declined by 2.5 barrels in the week ended December 13, to 367.8 million barrels.
Crude prices were also affected by the oil supplies from Libya, as the country’s oil production dropped from more than 1 million barrels a day to 110,000 barrels per day.
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