Oil edges higher on crude stock drop as market waits for U.S. Fed

Oil inched higher after U.S. crude stockpiles declined, but the market avoided any large moves before the Federal Reserve’s latest interest rate decision.

West Texas Intermediate futures neared US$90 after switching between gains and losses, with prices stuck in a US$12 band over the last month. U.S. crude stockpiles fell 3.12 million barrels last week, while gasoline inventories tumbled to the lowest since November 2014, according to an Energy Information Administration report Wednesday. 

The market will be watching the Fed’s interest-rate decision later Wednesday to gauge the outlook for demand. The central bank is expected to unleash the fourth rate hike in a row, this time by 75 basis points. As traders look for clues about the pace of economic growth, container shipping giant Maersk said Europe was close to a recession.

“The trading pattern has been really volatile after these Fed decisions,” said Matt Sallee, a portfolio manager at Tortoise, a firm that manages roughly US$8 billion in energy-related assets. “The market’s pretty set in on 75 basis points but I think the way they speak about December’s meeting will probably be more instructive for the market.”