Key points:
- Concerns over potential Russian supply disruption support prices
- Markets eye Fed meeting for clues on economy
- US crude stockpiles fell last week, industry data shows
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 
BRN1! were down 41 cents, or 0.6%, to $68.06 a barrel at 0939 GMT, while U.S. West Texas Intermediate crude futures CL1! were down 37 cents, also around 0.6%, to $64.15 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.
Reuters reported on Tuesday that three industry sources said Russia’s oil pipeline monopoly Transneft 
TRNFP had warned producers they might have to cut output following Ukraine’s drone attacks on critical export ports and refineries.
“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.”
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.
While markets have largely priced in a 25-basis-point Fed rate cut, which could ease borrowing costs and boost fuel demand, traders will be watching for remarks from Fed Chair Jerome Powell.
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.
“It looks like a make or break moment for the latest bounce in oil prices – reports of large funds piling in with bearish bets show that glut fears remain, something that could make gains hard to sustain,” said Chris Beauchamp, chief market analyst at IG Group.
“While Russia has continued to test NATO’s resolve, it seems that tensions will remain contained, providing a further negative impulse and making a test of recent lows more likely.”
