Oil prices up ahead of US stockpiles data, Fed meeting

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SINGAPORE: Oil prices rose in Asia Wednesday as traders awaited the release of US energy stockpiles data and a US central bank decision on interest rates.

The first crude shipment from Libya in two years had no immediate impact on prices a week before OPEC producers and Russia meet in Algeria to discuss ways to stabilise prices.

At around 0240 GMT, the US benchmark West Texas Intermediate for November delivery, a new contract, was 77 cents higher at $44.82 and Brent for November was up 59 cents at $46.47.

An oil tanker left the Libyan port of Ras Lanouf for Italy on Tuesday, in the first shipment since late 2014 when fighting erupted over control of the “oil crescent”, an official said in Tripoli.

“The amount of oil coming out of Libya is fairly limited so it won’t have a material impact on crude prices today,” Singapore-based OANDA senior market analyst Jeffrey Halley told AFP.

He said the shipment was meant to have gone out last week but was delayed because of fighting at the port.

“This is indicative of the unpredictability of Libyan oil production because the fighting means that we don’t know how sustained their output can be,” he added.

He said the two factors being closely watched this week are the Federal Reserve’s decision on interest rates and stockpile numbers to be released by the US Energy Information Administration (EIA).

A move by the Fed’s policy-setting committee to raise interest rates will likely boost the dollar and make oil more expensive for holders of other currencies, denting demand and prices.

Most analysts, however, expect officials to keep borrowing costs at current levels.

“We expect the (policy board) to keep rates unchanged this meeting,” Singapore’s United Overseas Bank said in a note.

But it said details of the meeting and a news conference by Fed chair Janet Yellen will be “closely scrutinised for hints of the next rate move”.

Analysts also expect the weekly US commercial crude inventories to be released by the EIA later Wednesday to show an increase, which would further add to oversupply concerns.

The OPEC producers’ group and Russia will meet in Algeria next week to discuss ways to stabilise prices, which may include a deal to freeze or cut output, although there are conflicting signals such an agreement can be reached.