Oil prices took a step back from recent highs on Wednesday, as all eyes turned to the US Federal Reserve's interest rate announcement.
Investors are feeling uncertain about when interest rates will peak and how that might affect energy demand.
Even though US oil stockpiles shrank more than expected and US shale oil production remained weak, oil prices still dropped. This suggests that oil supply might be tight for the rest of 2023.
Brent crude, the global benchmark, fell slightly to $93.33 per barrel after hitting $95.96 on Tuesday, its highest in almost a year.
US West Texas Intermediate crude also dipped to $90.45 per barrel after reaching a 10-month-high.
Experts say the oil market is still quite tight and will stay that way for a while. Unless there's a big change on Wall Street, the demand for oil should slowly decrease, but we'll likely see a shortage of oil throughout the winter.
Investors are watching closely as central banks, including the US Federal Reserve, make decisions about interest rates this week. This will give us clues about the economy and fuel demand.
While the Federal Reserve is expected to keep interest rates steady, people are curious about the path it will take in the future.
US oil stockpiles fell by about 5.25 million barrels last week, much more than experts had predicted. This drop in supplies, along with slower US shale oil production, adds to concerns about oil availability.
Russia is also considering raising export taxes on oil products to tackle fuel shortages.
This comes as US shale oil production is expected to drop to its lowest level since May 2023, thanks to extended production cuts by Saudi Arabia and Russia.
On the flip side, India's crude oil imports fell for the third month in a row in August due to maintenance and reduced shipments from Russia.
Meanwhile, Exxon Mobil plans to increase oil production in Nigeria, which could help boost oil supplies.
Oil prices are fluctuating as investors wait for the Federal Reserve's decision on interest rates.
Despite shrinking oil stockpiles and weak shale production, the oil market remains tight, and we may continue to see higher prices in the future.
