Crude oil prices dips by 2% before Federal Reserve decision; Brent decreases to $85.9/bbl

After reaching multi-month highs in the previous session, international crude oil prices fell on Wednesday, March 20, as investors got ready for the US Federal Reserve’s interest rate policy announcement later in the day. The US central bank is expected by most analysts to keep interest rates unchanged at today’s meeting for the fifth consecutive time.

At $85.99 a barrel, Brent crude futures for May saw a $1.39 decrease, or 1.59 percent, in value. April delivery US West Texas Intermediate futures, which settle on Wednesday, dropped $1.80, or 2.16 percent, to $81.67.

In the previous session, Brent reached its highest price of $87.38 a barrel, its highest since October 31; WTI reached its highest price of $83.47, its best since October 27.

Oil prices fluctuation before the Fed decision

-The markets, according to analysts, are worried about the Federal Reserve’s rate decision because interest rates have not decreased as one may have predicted. The Fed will make its announcement on Wednesday at 2:00 PM EDT.

-While it is not anticipated that the Fed will lower borrowing costs, new economic forecasts may indicate fewer interest rate reductions and a later start to policy easing than initially anticipated.

-The US dollar index increased before to the Fed’s announcement, which may also reduce the demand for oil among consumers in nations with different currencies.

Oil prices ahead

Pranav Mer, Vice President, EBG – Commodity & Currency Research at JM Financial Services Ltd said, “Crude oil prices are trading slightly lower today, amid some profit-booking from recent rally and as we look ahead to weekly oil inventory data later in the day.”

Also, some caution is seen in the market ahead of the US Fed meeting outcome. Technically, momentum remains positive with support at 6,780/ 6,685 and resistance at 7,000.”