Oil steadies as focus shifts to US stockpiles and Fed’s decision

Oil steadied after a two-day gain as an industry group flagged a fall in US crude stockpiles, and traders counted down to an interest-rate decision by the Federal Reserve.

Brent was little changed above $87 a barrel after a 2.4% advance in the week’s first two sessions lifted the benchmark to the highest close since late October. West Texas Intermediate was near $83. The American Petroleum Institute reported US crude holdings fell 1.5 million barrels, according to people familiar with the figures. The group also saw a sizable drop in gasoline inventories.

The US central bank is expected to hold rates steady for a fifth consecutive meeting later Wednesday, although policymakers may give hints about when they will be ready to pivot to easing. Carlyle Group LP’s Jeff Currie said oil would rise well above the current consensus for $70 to $90 a barrel if the Fed cuts interest rates in the coming months.

Crude has climbed by about 13% this year, having broken out of a tight trading range that stifled volatility in the opening weeks of 2024. The advance has been supported by supply cuts delivered by OPEC+ and geopolitical risks, including Ukrainian drone strikes on Russian refineries.

Oil’s timespreads suggest traders are pricing in a tighter market. Among them, the spread between Brent’s two upcoming December contracts has gapped out to more than $5 a barrel in backwardation, a bullish pattern marked by the nearer price being more expensive. A month ago, it was less than $4.