Oil dips below $83 in Asian trade

Oil dipped below $83 in Asian trade today as investors took profits after a recent rally, analysts said.

Traders were also waiting for the results of a meeting today and tomorrow of the US Federal Reserve and the release of a weekly US report indicating energy demand in the world's biggest economy.

New York's main contract, light sweet crude for delivery in June, was down 54 cents to $83.66 a barrel in morning trade. Brent North Sea crude for June was down 26 cents to $86.57.

"It could be due to profit-taking because (New York) crude oil prices rallied quite a bit last Friday touching about 85.50," said Serene Lim, a Singapore-based oil analyst with the ANZ bank.

"All eyes will be on the Fed statement... Depending on what comes out from the statement, that would impact interest rates and ultimately the US dollar and crude oil prices," she told AFP.

Because oil is traded in dollars, the strength or weakness of the US currency will affect oil prices and demand.

The US Federal Reserve board will discuss whether or not to raise its main interest rate from the zero-to-0.25% range where they have been since December 2008.

The historically low rates are seen as crucial to support the economic recovery -- keeping borrowing costs low and fuelling spending.

Investors will be closely watching to see if the Fed repeats its long-standing promise to keep exceptionally low rates "for an extended period."

Any shift in the language could be seen as heralding tighter monetary policy that could tame investors' appetite for risk.