Oil prices up ahead of Fed outcome, supply report

SINGAPORE- Oil prices rose in Asia Wednesday as dealers await the outcome of a US Federal Reserve meeting and the latest US supply report.

US benchmark West Texas Intermediate for December delivery rose 26 cents to $81.68 while Brent crude for December was up 20 cents at $86.23 in mid-morning trade.

“The focus is clearly on the Fed,” Singapore’s United Overseas Bank said in a commentary.

A statement on the two-day Fed meeting’s outcome will be released at 1800 GMT on Wednesday.

The US central bank is expected to announce an end to its vast asset-buying programme, which was credited with propping up the world’s biggest economy after the 2008 financial crisis.

Traders, having already discounted an end to the “quantitative easing” programme, are more interested in what bank policy makers say about the future direction of US interest rates.

“We expect the Fed to maintain its forward guidance on policy interest rates, saying they will remain low for a ‘considerable time’ once quantitative easing ends,” UOB said.

The Singapore bank added that the Fed will likely wait until December before it alters its guidance on interest rates, pending the release of more economic data.

Dealers meanwhile are also eyeing the latest US stockpiles report for clues about demand in the world’s top crude consumer.

US oil reserves are expected to have risen by 3.1 million barrels in the week to October 24, according to the consensus estimate of analysts polled by the Wall Street Journal.

The expected surge in stockpiles, coming after a 7.1 million rise last week, could add to worries about a global oversupply and put pressure on crude prices.