Oil prices fell Thursday as jittery investors awaited a key interest rate decision from the US Federal Reserve. While the rout in prices has increased demand for petroleum products, analysts say consumption is still insufficient to mop up the global glut of oil and that more cutbacks in production will be needed.

The Federal Reserve began a two-day policy meeting on Wednesday with economists evenly split on whether Thursday will see the first official US interest rate rise since 2006.

But Wednesday’s EIA report showed that oil in storage tanks at the Cushing, Oklahoma, delivery hub fell by 1.906 million barrels.

There’s less than a 50 per cent chance that prices will drop to US$20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said in an interview in Lake Louise, Alberta.

Falling share prices on Wall Street, which have provided guidance to oil of late, also pressured crude futures, along with reduced political tensions in the Middle East from US-Russia talks on Syria. Production peaked at 9.6 million barrels a day in April, the highest level seen since 1971.

United States benchmark West Texas Intermediate (WTI) for delivery in October dipped 14 cents to $47.01 a barrel and Brent crude for November edged down four cents to $49.71.

Yesterday’s decision by the USA central bank suggests that oil demand growth may not be as robust as some are projecting and therefore demand growth may not be the solution to rebalancing the oversupplied global oil situation, said Dominick Chirichella at Energy Market Analysis.

OPEC’s market share has shrunk in the past few years to 33 percent from as much as 40 percent in previous years because of a USA shale oil boom and new fields coming on stream in countries such as Canada and Russian Federation.

Non-OPEC oil supply is expected to grow by 0.88 mb/d in 2015, following a downward revision of around 72,000 barrels per day, due to lower-than-expected output in the US. That could be bearish for dollar-denominated oil as it would make fuel more expensive for importers who hold other currencies.