Brent Steady Ahead of Fed Meeting

Brent crude oil traded steadily below $107 on Wednesday morning as markets anxiously awaited the outcome of the US Federal Reserve's two day policy meeting. The commodity traded at $106.85 as supply disruptions and concerns about waning global demand played at odds.

Crude supply outages in Iraq, South Sudan, Iran and Libya have contributed heavily to Brent's strength recently. Despite worries about increasing US shale oil supplies and an economic slowdown in China, the commodity has traded well above $100 on concerns about supply cuts.

Investors will be focused on the Fed's statement, due out on Thursday, for clues about the bank's timeline for tapering its $85 billion per month stimulus spending. Crude can expect a negative impact if the Fed confirms speculation that it will ease back on its bond buying plan beginning in September.

Despite the fact that cutting stimulus spending ultimately means the US economy has improved and demand is likely to rise, the dollar will strengthen which in turn would have a negative impact on any commodity measured in US dollars. Also supporting oil prices was a report from the American Petroleum Institute which showed that the nation's crude stockpiles dropped for the fifth consecutive week. CNBC reported that although stockpiles fell less than the forecast 2.3 million barrels, the drop of 740,000 barrels was enough to suggest the number one oil consuming nation's oil appetite was increasing. Moving forward, in addition to the Fed's statement, investors will be watching out for several US indicators, including GDP, the Energy Information Administration's inventory report and non-farm payrolls data. The conclusion of the Fed's meeting, GDP data and the inventory report are all due later on Wednesday, while the non-farm payrolls data won't be released until Friday.

BY Laura Brodbeck