Oil prices took a hit in the U.S. session on Tuesday after the International Energy Agency (IEA) warned in its latest market update that it may take longer for oil prices to re-balance, citing a faster-than-expected slowdown in global oil demand growth.
That followed remarks from the Organization of the Petroleum Exporting Countries (OPEC) earlier this week that key central bank decisions, such as the one due in the U.S. later this month, would be crucial in determining the state of global growth and the overall health of the energy sector.
If the U.S. Federal Reserve does raise interest rates later this month, it would likely strengthen the dollar, which would make dollar-denominated oil trades more expensive for buyers holding other currencies. That could, in turn, hamper global demand and consumption.
"Long-suffering oil bulls will now turn nervously to the U.S. Energy Information Administration's commercial crude inventory numbers to be released [later in the global day]," said Jeffrey Halley, a senior market analyst at OANDA.
"It was an unexpected undershoot in these numbers last week that set off the rally in crude last week. A rebound in this data will no doubt create an emotional day for oil longs in the New York session," Halley added.
During Asian hours on Wednesday, U.S. crude futures rebounded modestly, up 0.82 percent at $45.27 a barrel, following a 3 percent drop overnight, after data from the American Petroleum Institute showed a smaller-than-expected build up of crude inventories for the week ended September 9.
Global benchmark Brent added 0.62 percent to $47.39 as of 3:02 p.m. HK/SIN, after falling 2.5 percent on Tuesday.
In the currency market, the dollar index, which measures the greenback against a basket of currencies, was at 95.471 at 3:05 p.m. HK/SIN, off an earlier high of 95.662, but up from levels under 95 last week.
The Japanese yen traded at 103.29 against the greenback, with the Japanese currency down from an earlier session high of 102.40.
In company news, shares of Japan's Seiko Holdings fell 5.95 percent after the watchmaker cut its profit outlook. Reuters reported the company said it expected a group net profit of 3 billion yen in the full fiscal year through March 31, down from its previously projected net profit of 10 billion yen.
Stateside, the Dow Jones industrial average fell 258.32 points, or 1.41 percent, to 18,066.75. The S&P 500 slid 32.02 points, or 1.48 percent, to 2,127.02, while the Nasdaq ended down 56.63 points, or 1.09 percent, at 5,155.25.
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