By Gina Lee
Investing.com – Oil was down on Wednesday morning in Asia, easing as investors booked profit ahead of the U.S. Federal Reserve’s latest policy decision. However, fears over tighter supply over geopolitical tensions in Ukraine and the Middle East capped losses.
Brent oil futures were down 0.32% to $86.90 by 11:29 PM ET (4:29 AM GMT) and WTI futures fell 0.41% to $85.25.
"Some corrections have kicked in as investors wanted to adjust their positions ahead of the Fed meeting," Nissan (OTC:NSANY) Securities general manager of research Hiroyuki Kikukawa
"But the downside is limited due to heightened tensions between Russia and Ukraine and the threat to infrastructure in the United Arab Emirates (UAE)," he said, adding that oil was likely to continue its upward run after the Fed update.
The Fed will hand down its policy decision later in the day, which could provide clues as to when it will hike interest rates and begin quantitative tightening.
The black liquid hit seven-year highs last week on worries that supplies could tighten due to tensions in both Ukraine and the Middle East.
U.S. President Joe Biden said on Tuesday he would consider personal sanctions on Russian counterpart Vladimir Putin should Russia invade Ukraine. Western leaders also accelerated both military preparations and plans to shield Europe from a potential energy supply shock.
In the Middle East, the UAE is still reeling from Monday’s missile attack by Yemen's Houthi movement.
Meanwhile, Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a draw of 872,000 barrels for the week ended Jan. 21. Forecasts prepared by Investing.com predicted a draw of 400,000 barrels, while a 1.404-million-barrel build was reported during the previous week.
The figures were within analysts' estimates, according to Nissan Securities' Kikukawa.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
On the supply side, the U.S. Department of Energy on Tuesday approved an exchange of 13.4 million barrels of crude oil from the Strategic Petroleum Reserve to seven companies. The exchange is part of the U.S. effort to help control oil prices.