Oil prices rose at the beginning of Wednesday’s trading session, as investors remained cautious ahead of the Federal Reserve’s (US central bank) interest rate decision, and as they assessed the impact of tougher sanctions on Russia on supplies.
Brent futures rose 32 cents, or 0.44 percent, to 73.51 dollars a barrel, by 0730 GMT, and WTI rose 32 cents, or 0.46 percent, to 70.40 dollars a barrel.
Analysts say the market is waiting for indications of interest rate movements next year, after the meeting of the Federal Reserve’s Open Market Committee, which ends later on Wednesday.
“The imposition of additional sanctions by the west (on Russia) may limit some losses in today’s session, but caution still prevails before the meeting,” said Yip Jun Rong, strategic market analyst at IG, referring to the meeting of the Federal Reserve committee.
“Given what will happen in the near future, oil prices are likely to remain in their current tight range … With the expectation that this will continue until the end of the year”.
The Federal Reserve is widely expected to cut interest rates on Wednesday for the third time since the start of the monetary easing cycle. Low interest rates reduce the cost of borrowing, which can boost economic growth and, in turn, increase demand for oil.
On Tuesday, the European Union adopted the fifteenth package of sanctions against Russia for its invasion of Ukraine, adding another 33 ships from the Russian shadow fleet used to transport crude oil or petroleum products. Britain has also imposed sanctions on 20 ships for the illegal transportation of Russian oil.
The new sanctions could increase the volatility of oil prices, although so far they have not succeeded in keeping Russia out of the global oil trade.
