By Ambar Warrick
Investing.com-- Oil prices moved little on Tuesday as traders kept away from big bets ahead of a U.S. Federal Reserve meeting, while doubts over steady demand in the remainder of the year also weighed on trade.
London-traded Brent oil futures rose 0.1% to $91.84 a barrel, while U.S. crude West Texas Intermediate futures fell 0.3% to $85.09 a barrel by 21:07 ET (01:07 GMT).
The Fed is broadly expected to raise interest rates by 75 basis points on Wednesday, and signal more hikes as it moves to curb inflation reaching a 40-year high. Other central banks in Europe and Asia are also expected to hike rates this week, amid surging inflation levels across the globe.
Rising interest rates tend to weigh on crude prices by curtailing the amount of liquidity available in markets. They also pressure the spending strength of consumers.
Data this week showed that U.S. road travel fell 3.3% in July, as high fuel prices continued to dent gasoline demand in the country. While a recent dip in gasoline prices has benefited local demand, this could change as rising interest rates further pressure consumers.
Elevated inflation in the U.S. has been largely tied to high fuel prices, which in turn has spurred measures by the government to curb rates. The country has steadily drawn from its Strategic Petroleum Reserve (SPR) this year, bringing it to its lowest level in 38 years.
The Department of Energy now plans to release an additional 10 million barrels of oil from the SPR ahead of a complete ban on Russian oil imports by the European Union.
This, coupled with plans by Chinese crude refiners to increase exports, could result in a potential supply glut for crude markets.
Oil prices have tumbled from highs hit during the onset of the Russia-Ukraine war, and are now trending near their lowest levels for the year as traders feared that a recession would cripple global demand.
But prices rose slightly on Monday on hopes that easing COVID restrictions in major importer China will benefit demand.
Failure by several members of the Organization of Petroleum Exporting Countries to meet their production targets has also raised expectations that supply could tighten later this year. A harsh winter in Europe could also see the use of more heating oil, benefiting crude prices.