LONDON—Oil prices fell by more than $1 on Wednesday ahead of the U.S. Federal Reserve's interest rate decision, with investors uncertain when peak rates will be hit and how much of an impact it will have on energy demand.
Investors are awaiting the Fed's interest rate decision at 1800 GMT on Wednesday to assess the outlook for economic growth and fuel demand. The Fed is widely expected to keep interest rates on hold, but the focus will be on its projected policy path, which is unclear.
"The oil rally is taking a little break as every trader awaits a pivotal Fed decision that might tilt the scales of whether the U.S. economy has a soft or hard landing," said Edward Moya, senior market analyst at data and analytics firm OANDA.
Global benchmark Brent crude futures fell by $1.46, or 1.55 percent, to $92.88 a barrel by 0854 GMT.
U.S. West Texas Intermediate crude futures shed 1.43 percent, or $1.30, to $89.90 a barrel. The October WTI contract expires on Wednesday and the more active November contract was down $1.38, or 1.53 percent, to $89.10 a barrel at 0854 GMT.
Analysts in a Reuters poll had expected a 2.2 million-barrel decline in U.S. crude oil stockpiles.
"We have nudged up our 12-month ahead Brent forecast from $93 a barrel to $100 a barrel as we now expect modestly sharper inventory draws. The key reason is that significantly lower OPEC supply and higher demand more than offset significantly higher US supply," said Goldman Sachs analysts in a Wednesday note.
Elsewhere, data from the U.K. showed a surprise drop in inflation in August, sparking expectations that the Bank of England could pause its historic run of interest rate hikes as soon as Thursday. The consumer price index fell by 0.1 percentage points to 6.7 percent, its lowest since February 2022.