Prices of crude oil stabilized at three-month-highs on Tuesday as traders awaited news from the Federal Reserve after signs of tighter supply and Chinese promises to boost the second-largest economy in the world.
By 09:30 ET (13:30 GMT), futures were trading 0.2% higher, at $78.56 per barrel. The contract fell 0.2% to $82.30.
Crude benchmarks are up four weeks in a row, thanks to the Saudi Arabian and Russian announcements at the beginning of the month that they plan to reduce their production by 1.5 million barrels a day each, from July levels.
Beijing’s pledge to increase economic support for China, the second-largest oil consumer in the world, also helped boost sentiment.
“China will play a key role in the growth of global oil demand this year. The market is becoming increasingly concerned about the slower-than-expected recovery. Any support measures can help ease some of these fears.”
The traders were reluctant to drive the market higher at the beginning of the two-day meeting, which will set the policy for the U.S. Federal Reserve.
Markets have largely priced in an increase of a quarter point from Wednesday. The focus now will be what the Fed Chair says about future rate hikes, amid expectations that the central bank will make its last hike for the year at this meeting.
The crude oil market has recently been buoyed by recent optimism that the U.S. will not fall into recession as a result of the Fed’s aggressive tightening of monetary policy.
The latest data from the industry body on U.S. crude stocks will be released later in the day, before the announcement by the Fed on Wednesday.
The inventory is expected to drop by more than 2M barrels in the week ending July 21 amid expectations that refiners produced heavy volumes again last week, anticipating peak demand during summer driving season.