Oil prices eased on Wednesday, after rising more than 1% in the previous session, though ongoing geopolitical jitters provided a floor for the market, with traders eyeing an expected interest rate cut from the U.S. Federal Reserve later in the day.

Brent crude futures were down 33 cents, or 0.5%, to $68.14 a barrel at 0810 GMT, while U.S. West Texas Intermediate crude futures were down 32 cents, or 0.5%, to $64.20 a barrel.

The benchmarks settled more than 1% higher in the last trading session due to concerns that Russian supplies may be disrupted by Ukrainian attacks.

"If the drone damage (to Russian energy infrastructure) proves to be short-lived, the recent range of say, $5 per barrel, will resume," said PVM Oil Associates analyst John Evans.

"Given the impasse in sanctions and the arrival of more OPEC barrels, the only hope for an oil rally has been through the lack of distillate stock as we approach winter."

Reuters reported on Tuesday that three industry sources said Russia's oil pipeline monopoly Transneft had warned producers they might have to cut output following Ukraine's drone attacks on critical export ports and refineries.

Investors are also awaiting the outcome of the Federal Reserve's September 16–17 meeting, with a new governor, Stephen Miran, on leave from the Trump administration, joining the deliberations.

"Markets are betting on a 25-basis-point Fed rate cut tonight, which traders believe could ease borrowing costs and boost fuel demand," said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

She added that the oil rally had also been buoyed by geopolitical jitters and supply risks from conflicts.

"That said, I remain cautious. The global supply overhang for the rest of 2025 looks almost certain as OPEC+ is raising output," Sachdeva added.

On the supply side, market sources citing American Petroleum Institute figures said that U.S. crude and gasoline stocks fell last week, while distillate stocks rose.

The market will also be awaiting data from the U.S. Energy Information Administration a Reuters poll of nine analysts estimated crude inventories fell while distillate and gasoline stockpiles rose.

Source: investing.com