U.S. crude dips for first time in three days as Fed decision looms

West Texas Intermediate CLc1 fell 50 cents to $36.85 a barrel by 0048 GMT (7.48 p.m. EDT) after rising more than $1 on Tuesday. It fell to $34.53 on Monday, the lowest since it financial crisis bottom of $32.40, before ending the day higher.

Brent LCOc1 had yet to trade. The contract settled up 53 cents at $38.45 a barrel on Tuesday, closing higher for the first in eight days.

On Monday, the global oil benchmark came within 14 cents of a December 2008 bottom of $36.20, unleashing a surge of buying support.

The Federal Reserve on Tuesday started a two-day meeting where it is expected to raise rates eight years after a devastating recession opened an era of loose U.S. monetary policy.

A rise in rates is typically negative for oil prices because a hike is likely to prop up the greenback, making crude contracts more expensive as they are denominated in dollars.

Markets are already prepared for a 25 basis point increase but will be closely watching the Fed's policy statement for indications of where rates will go next year.

In a further sign of oversupply in the market, data released late on Tuesday by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in U.S. crude stockpiles last week. <API/S>

A Reuters poll of analysts had forecast a 1.4 million-barrel draw instead. Official inventory data is due on Wednesday from the U.S. Energy Information Administration <EIA/S>

(Reporting by Aaron Sheldrick; Editing by Ed Davies)