On Tuesday, oil prices ended up losing ground due to the threat of further interest rate increases and continued Russian crude flows that disrupted demand recovery expectations from China.
March crude futures fell by 5 cents to $84.85 per barrel by 0415 GMT, while the more heavily traded April contracts fell by 32 cents or 0.38 per cent to $84.18 a barrel.
U.S. West Texas Intermediate WTI crude futures fell 33 cents, or 0.42 per cent, to $77.57 a barrel.
Oil markets are facing downside pressure as risk-off trades prevail ahead of the Fed meeting, along with a strengthened USD, according to CMC Markets analyst Tina Teng.
The demand outlook is uncertain as Russia's exports seem unaffected by sanctions despite China's reopening, she added.
The Bank of England and the European Central Bank are expected to raise interest rates by 25 basis points on Wednesday, with a half-point increase by the Bank of England and the European Central Bank the following day. Higher rates could slow the global economy and weaken oil demand.
The market turned its attention to a virtual meeting on February 1 at 1100 GMT of the Ministers of the Organization of the Petroleum Exporting Countries OPEC and others, a group known as the OPEC The panel will recommend keeping the oil producer group's current output policy unchanged when it meets this week, five OPEC delegates told Reuters on Monday.
OPEC agreed in October to reduce its production target by 2 million barrels per day bpd, about 2 per cent of world demand, from November to the end of 2023.
Russia continues to supply the global market with its oil despite a European Union ban and G 7 price cap imposed over its invasion of Ukraine, which pressured prices.
There was a decrease in official purchasing managers' index PMI from China, pointing to healthy demand going forward, as the country's non-manufacturing activity broke into expansion territory for the first time since September 2022, as the country's non-manufacturing activity broke into expansion territory.
The International Monetary Fund IMF raised its global growth outlook slightly in 2023 due to the surprisingly resilient demand in the United States and Europe, easing energy costs and the reopening of China's economy after Beijing abandoned its strict COVID 19 restrictions.