US crude dips for first time in three days as Fed decision looms

WTI fell 50 cents to $36.85 a barrel after rising more than $1 on Tuesday

US oil prices fell in Asian trade on Wednesday, snapping two days of gains that pulled crude back from testing 11-year lows, as investors awaited the outcome of a Federal Reserve meeting that will likely raise interest rates.

West Texas Intermediate fell 50 cents to $36.85 a barrel by 0048 GMT after rising more than $1 on Tuesday. It fell to $34.53 on Monday, the lowest since it financial crisis bottom of $32.40, before ending the day higher.

Brent had yet to trade. 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 support.

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 US 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 US crude stockpiles last week.

A Reuters poll of analysts had forecast a 1.4 million-barrel draw instead. Official inventory data is due on Wednesday from the US Energy Information Administration.