Oil prices eased on Wednesday as investors booked profits ahead of an update from the U.S. Federal Reserve, although fears over tighter supply amid tensions in Ukraine and the Middle East capped losses.
Brent crude futures were down 15 cents, or 0.2%, at $88.05 a barrel at 0105 GMT, having jumped 2.2% in the previous session. U.S. West Texas Intermediate (WTI) crude futures slipped 31 cents, or 0.4%, to $85.29 a barrel, having climbed 2.8% on Tuesday.
“Some corrections have kicked in as investors wanted to adjust their positions ahead of the Fed meeting,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“But downside is limited due to heightened tensions between Russia and Ukraine and the threat to infrastructure in the United Arab Emirates,” he said, adding that oil was likely to continue its upward run after the Fed update.
The Fed is expected to firm up plans to raise interest rates and shrink its holdings of U.S. Treasury bonds and mortgage-backed securities, which have swollen its balance sheet to about $9 trillion. Oil prices hit seven-year highs last week on worries that supplies could tighten due to Ukraine-Russia tensions and worries about the conflict in Yemen. [Reuters]
