Brent oil futures were down 0.32% to $86.90 and WTI futures dropped 0.41% to $85.25
Oil was down on Wednesday morning in Asia, easing as investors booked profit ahead of the U.S. Federal Reserve’s latest policy decision. However, fears over tighter supply amid geopolitical tensions in Ukraine and the Middle East capped losses.
Brent oil futures were down 0.32% to $86.90 by 4:29 AM GMT and WTI futures dropped 0.41% to $85.25.
Some corrections have kicked in as investors wanted to adjust their positions ahead of the Fed meeting, Nissan Securities general manager of research Hiroyuki Kikukawa said.
But the downside is limited due to heightened tensions between Russia and Ukraine and the threat to infrastructure in the United Arab Emirates (UAE), he said, adding that oil was likely to continue its upward run after the Fed update.
The Fed will hand down its policy decision later in the day, which could provide clues as to when it will hike interest rates and begin quantitative tightening.
Oil hit seven-year highs last week on worries that supplies could tighten due to tensions in both Ukraine and the Middle East.
Meanwhile, U.S. crude and distillate stocks fell while gasoline inventories rose for the week ended Jan. 21, with crude inventories declining by 872,000 barrels, according to market sources citing American Petroleum Institute figures on Wednesday.
The figures were within analysts’ estimates, according to Nissan Securities’ Kikukawa.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
On the supply side, the U.S. Department of Energy on Tuesday approved an exchange of 13.4 million barrels of crude oil from the Strategic Petroleum Reserve to seven companies. The exchange is part of the U.S. effort to help control oil prices.