The price of oil fell by more than 1%, helped by growing hopes for a ceasefire in the Middle East, as well as the strengthening of the US currency ahead of the Fed meeting.
Analysts said the possibility of a ceasefire agreement between Israel and Hamas had eased fears of an escalation of the conflict and any possible supply disruptions. However, the Israeli Prime Minister promised to continue the long-promised attack on the city of Rafah in southern Gaza, regardless of the outcome of negotiations with Hamas.
Meanwhile, the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.17% to 106.40, reaching its highest level since April 16.
The drop in oil prices was also caused by news of an increase in oil reserves in the United States and an increase in the supply of crude oil. According to official data, U.S. production rose to 13.15 million barrels per day in February from 12.58 million barrels per day in January. This was the largest monthly increase in about 3.5 years. Meanwhile, the American Petroleum Institute said that U.S. oil reserves rose by 4.9 million barrels last week. This will be the fifth increase in six weeks, if it is confirmed by official data, which will be released at 14:30 GMT. Persistent signs of inflation also raise concerns about oil demand in the United States, ahead of the automotive season, when gasoline demand is strongly increasing.