July 26 Reuters Oil prices pulled back from threemonth highs on Wednesday as industry data showed a build in U.S. crude inventories and investors remained cautious ahead of an expected Federal Reserve rate hike later in the day.

Brent crude futures slipped 38 cents, or 0.45, to 83.26 a barrel by 0623 GMT, while U.S. West Texas Intermediate WTI crude was at 79.22, down 41 cents, or 0.51.

U.S. 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 had expected a 2.3 million barrel drawdown.

U.S. government data on inventories is due on Wednesday.

The market will continue to be in a tugofwar between tightening global supply and fears of slowing demand due to the global economic slowdown, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that investors had also squared their positions ahead of the Fed rate decision.

Whilst the market is largely expecting the Fed to hike rates today, any signals that they still have more to do after this would likely put some pressure on risk assets, said ING head commodities strategist Warren Patterson.

The Fed39;s policy meeting started on Tuesday, with most market participants expecting the central bank to deliver a 25 basispoint rate hike when it concludes. But, with price pressures easing, money market traders are split on the odds of another hike later in the year….