Oil fell as the market's breakneck rally that pushed prices to US$95 a barrel on Tuesday took a breather.

Brent crude fell about one per cent to near US$93 a barrel. Crude has been flashing overbought on a technical basis for several days, suggesting the climb to a 10-month high may have been overdone. 

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Crude has roared higher thanks to supply curbs from OPEC+ linchpins Saudi Arabia and Russia, as well as brighter outlooks in the two biggest economies, the U.S. and China. While the upswing has reignited talk of a return to US$100 oil, that may be a headache for central bankers, including those at the Fed who decide policy later Wednesday.

“The impressive run-up in crude oil prices had to come to a temporary halt and today's Fed decision on interest rates provides the perfect excuse to bank some money,” PVM Oil Associates Ltd. analyst Tamas Varga wrote in a note.

Prices:

  • WTI for November delivery declined 1.1 per cent to US$89.45 a barrel at 10:19 a.m. in London.
  • The October contract, which expires Wednesday, eased 1.4 per cent to US$89.92 a barrel.
  • Brent for November settlement fell 1.1 per cent at US$93.30 a barrel, after approaching US$96 in intraday trading on Tuesday.

Widely tracked measures of supply and demand reinforce signals that the market is tightening. In the U.S., the industry-funded American Petroleum Institute said that nationwide inventories shrank by 5.25 million barrels last week, including a drawdown at the Cushing hub, according to people familiar with the figures. A separate assessment from AlphaBBL Corp. also showed a drop at the Oklahoma storage site. Official data come later on Wednesday.

In addition, timespreads retain a strong tone. The gap between WTI's two nearest December contracts was a little below US$10 a barrel in a bullish backwardated structure, more than twice the figure a month ago.