Oil up over uncertainties ahead of US Fed meeting

By Sibel Morrow

ANKARA (AA) - Oil prices increased on Tuesday over uncertainties ahead of the upcoming US Federal Reserve meeting and despite its decision to sell oil from its emergency stockpiles.

International benchmark Brent crude traded at $92.70 per barrel at 10.22 a.m. local time (0722 GMT) for a 0.76% increase from the closing price of $92 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $85.86 per barrel at the same time for a 0.58% gain after the previous session closed at $85.36 a barrel.

Oil prices rebounded from Monday's losses when Brent declined more than 2% during intraday trading over looming demand fears ahead of expected interest rate hikes by major economies, including the US.

The oil market has been under sustained inflationary pressure. Supply disruptions, the Russia-Ukraine war and depleting spare capacity of oil-producing countries have pushed oil prices higher.

Rising gas prices have also placed additional upward pressure on prices by forcing industries to switch from gas to oil, increasing oil demand amid global supply disruptions.

In response, central banks have been forced to take more hawkish monetary policy moves. Expectations of such monetary policy decisions heightened after the US reported a higher-than-expected annual inflation rate of 8.3% in August.

The annual inflation rate in August for the eurozone reached a record high of 9.1%, driven by skyrocketing energy costs.

Analysts predict that central banks will preserve their policies of raising interest rates to stem inflation.

The markets are now awaiting the meeting of the US Federal Reserve on Wednesday when the Fed is expected to raise interest rates by 75 basis points, although a rise of 100 basis points is still on the cards.

Price increases came despite an announcement by the US Department of Energy to sell up to 10 million barrels of crude oil from its SPR to lower energy costs for American families.

The sale is part of US President Joe Biden’s pledge to release a total of 180 million barrels from the country’s SPR in March to support the market in the face of supply disruptions caused by the Russia-Ukraine war.

Deliveries of the less sulfuric sweet crude oil from the SPR will be made in November.

The department said with the sale of the last batch, some 165 million barrels of oil would be sold out of a total of 180 million barrels.

The sale will be conducted from the SPR's sites in Big Hill, Texas and West Hackberry, Louisiana to potential buyers no later than Oct. 7.