Crude oil fell in Asian trade on Wednesday, snapping gains that pulled prices back from testing 11-year lows, as investors awaited the outcome of a Federal Reserve meeting, where interest rates are likely to be raised.
West Texas Intermediate fell 45 cents to $36.90 a barrel after rising more than $1 on Tuesday. It fell to $34.53 on Monday, the lowest since the financial crisis bottom of $32.40, before ending the day higher.
Brent was down 47 cents at $37.98. The contract settled up 53 cents at $38.45 a barrel on Tuesday, closing higher for the first in eight days.
On Monday, the global oil benchmark came within 14 cents of a December 2008 bottom of $36.20, unleashing a surge of buying.
The drop in prices is not surprising after the rally the previous session as the market girds itself for the decision on rates and official figures on inventory levels in the U.S., said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
The Federal Reserve on Tuesday started a two-day meeting where it is expected to raise rates eight years after a devastating recession opened an era of loose U.S. monetary policy.
A rise in rates is typically negative for oil prices because a hike is likely to prop up the greenback, making crude contracts more expensive as they are denominated in dollars.
Markets are already prepared for a 25 basis point increase but will be closely watching the Fed’s policy statement for indications of where rates will go next year.
In a further sign of oversupply in the market, data released late on Tuesday by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in U.S. crude stockpiles last week.