Oil futures were mixed Tuesday as the Federal Reserve prepared to kick off a two-day policy meeting that’s expected to result in another supersize rate increase.
West Texas Intermediate crude for October delivery
fell 34 cents, or 0.4%, to $85.39 a barrel on the New York Mercantile Exchange. November WTI
the most actively traded contract, was down 13 cents, or 0.2%, at $85.23 a barrel.
October natural gas
was flat at $7.752 per million British thermal units.
Analysts said oil traders, like participants in other markets, are paying close attention to the Fed, which is expected to deliver a rate increase of at least 75 basis points, or 0.75 percentage point, when it concludes its two-day meeting Wednesday. Fed-funds futures market have priced in an outside chance of a 100 basis point increase.
Aggressive tightening by the Fed and other major central banks has weighed on crude, stoking fears of a global economic slowdown or recession that could hit demand.
Meanwhile, falling refinery margins were also seen as a drag on crude, said Warren Patterson, head of commodities strategy at ING, in a note.
“Also not helping sentiment in the oil market at the moment is the weakness that we are seeing in refinery margins. Margins have come under pressure,” he said, noting reports that China could boost export quotas for refined products.
“The refined product market, particularly middle distillates, has faced significant tightness for much of the year, and so increased Chinese supply would be welcomed by many in the market,” he wrote.