--Oil futures flat ahead of inventory, central bank news
--EIA seen reporting oil inventory draw of 800,000 bbls
--Impact of Fed moves on dollar affects crude oil prices
NEW YORK--Oil futures paused Wednesday ahead of closely watched inventory data from the U.S. government and an announcement on monetary policy from the Federal Reserve.
Light, sweet crude for September delivery rose 40 cents, or 0.5%, to $88.46 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe rose 87 cents, or 0.8%, to $105.79 a barrel.
Futures were little changed ahead of the Energy Information Administration's weekly report on U.S. oil inventories, which are expected to show a drop of 800,000 barrels during the week ended July 27, according to a survey of analysts by Dow Jones Newswires.
The American Petroleum Institute, an industry group, late Tuesday said its own survey showed an 11.6 million barrel draw in crude stockpiles last week, though prices were little moved by the figure as traders await confirmation from the more closely watched EIA report.
"To see this number come out of the blue--it's surprising the market didn't react stronger," said Carl Larry, president of oil-trading advisory firm Oil Outlooks and Opinions in New York, adding that traders are also awaiting news due from the Federal Open Market Committee, the Fed's policy-making body, later in the day.
"At the end of the day we're all waiting on the FOMC meeting," he said.
Analysts expect the EIA to report gasoline stockpiles last week rose 500,000 barrels. Stocks of distillates, including heating oil and diesel fuel, are seeing rising 800,000 barrels. Refinery utilization is seen falling 0.3 percentage point.
Separately, the U.S. central bank is set to conclude its two-day policy meeting Wednesday afternoon, with markets focused on the prospect of additional monetary stimulus measures. Analysts, however, say the Fed is likely to hold off on new stimulus unless further evidence of a slowing economy emerges.
Oil-market participants have closely watched moves by the Fed because of their impact on the dollar, which in turn affects the value of dollar-denominated crude. Previous stimulus measures have tended to boost the price of oil by weakening the greenback, thereby making crude cheaper for holders of other currencies.
"The markets should remain relatively quiet and stable until the outcome is announced," said Dominick Chirichella, analyst at the Energy Management Institute, in a research note.
The Wall Street Journal Dollar Index, which tracks the greenback against a basket of major currencies, was recently nearly flat at 71.653.
The Fed's interest rate announcement is due at 2:15 p.m. EDT. A policy update from the European Central Bank is due Thursday.
Front-month September reformulated gasoline blendstock, or RBOB, recently rose 4.26 cents, or 1.5%, to $2.8169 a gallon. September heating oil rose 1.27 cents, or 0.5%, to $2.8607 a gallon.
Write to Dan Strumpf at dan.strumpf@dowjones.com.
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