(Bloomberg) — Oil prices steadied as traders await Wednesday’s interest-rate decision from the Federal Reserve to gauge the economy’s strength and the trajectory of oil demand.

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West Texas Intermediate swung between gains and losses before ending the session near $78 a barrel. Crude had rallied almost 3% on Monday as traders decided to “buy the dip” following a decision by OPEC+ to restore some supply this year. The initial selloff prompted the group to clarify it could pause or reverse production changes if needed.

“After recent declines, oil prices have room to recover in the short term,” Morgan Stanley analysts including Martijn Rats and Charlotte Firkins said in a note. “Nevertheless, inventories are currently higher than we expected some time ago, and on current trends, supply/demand balances will likely weaken after the third quarter.”

Traders are watching for a Federal Reserve interest-rate decision due on Wednesday. A robust economy and still-high inflation in the US have seen investors pare bets that the central bank’s pivot will happen anytime soon. The resulting strength in the dollar has added pressure to prices.

Oil has trended lower since early April on concerns about soft demand and swelling supply from outside of OPEC. Output from Russia last month stayed above a level the country had pledged to the OPEC+ alliance, even as it made the deepest cuts in more than a year.

In the US, signs of robust supplies continue. Crude output is expected to swell by 310,000 barrels a day this year to a record above 13.2 million barrels a day, about 40,000 barrels a day more than projected in May, according to a monthly Energy Information Administration report Tuesday.

OPEC maintained its forecasts for strengthening demand in the second half on continued economic growth in China and other emerging economies, the organization said in a monthly report. The International Energy Agency will release its monthly report on Wednesday.

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–With assistance from Alex Longley and Jordan Fitzgerald.

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