Oil prices eased on Wednesday, sliding from three-month highs hit the previous day after industry data showed an expected rise in US crude stockpiles, but losses were capped amid signs of tighter global supply and hopes for China's economic stimulus.

Share Market Live

NSE

Brent crude futures slid 32 cents, or 0.4 percent, to $83.32 a barrel by 0036 GMT. US West Texas Intermediate (WTI) crude was at $79.35 a barrel, down 28 cents, or 0.4 percent.

"An increase in US crude inventories last week promoted some selling," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that investors also squared their positions ahead of a monetary policy decision by the U.S. Federal Reserve.

US crude stocks rose by about 1.32 million barrels in the week ended July 21, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters expected a 2.3 million barrel drawdown.

Gasoline inventories fell by about 1.04 million barrels, while distillate inventories rose by about 1.61 million barrels.

US government data on inventories is due on Wednesday.

Prices slipped after Brent and WTI on Tuesday hit their highest since April 19 amid concerns over tighter supplies and pledges by Chinese authorities to shore up the world's second-biggest economy.

"The market will continue to be in a tug-of-war between tightening global supply and fears of slowing demand due to global economic slowdown, though we expect oil prices to test their upside during the summer driving season when demand is higher," he said, predicting WTI would test mid-$80 levels in the July-August period.

The Fed's policy meeting started on Tuesday, with most market participants expecting the central bank to deliver a 25 basis-point rate hike when the meeting concludes on Wednesday.

With crude supplies expected to tighten due to output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies, oil prices have already clinched four weekly gains in a row.

Saudi oil exports fell almost 40 percent in May from the same period a year ago, latest government data released on Tuesday showed.

Meanwhile, leaders in China, the world's No 2 oil consumer, pledged to step up economic policy support.

On Tuesday, the International Monetary Fund raised its 2023 global growth estimates slightly given resilient economic activity in the first quarter, but warned that persistent challenges were dampening the medium-term outlook.

Also Read: Asian equities trade mixed ahead of US Fed meeting