Oil prices edged lower on Wednesday after rising more than 1% in the previous session. However, persistent geopolitical instability curbed market movement, while traders also awaited a US Federal Reserve interest rate cut, UNN reports with reference to Reuters.
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By 06:30 GMT (09:30 Kyiv time), Brent crude futures fell 8 cents, or 0.1%, to $68.39 a barrel, while West Texas Intermediate crude futures fell 6 cents, or 0.1%, to $64.4.
During the last trading session, oil prices rose by more than 1% due to fears of possible supply disruptions from Russia.
It was reported that the Russian oil pipeline monopolist "Transneft" warned producers about a possible reduction in production after drone attacks on critical export ports and refineries.
"The market is focused on geopolitical volatility and potential supply disruptions from Russia. Market fluctuations continue to support high prices," said Emril Jamil, senior oil analyst at the London Stock Exchange Group.
Investors are also awaiting the results of the Fed meeting, which will take place on September 16-17. The discussion will include new Fed Board of Governors member Steven Miran, who is on leave due to his resignation from the Trump administration, and Lisa Cook, the second policymaker who continues to face President Donald Trump's attempts to have her removed.
The US central bank is expected to cut its interest rate by 25 basis points on Wednesday, which should stimulate the economy and increase demand for fuel.
"Markets are betting on a 25 basis point Fed rate cut tonight, which traders believe could lower borrowing costs and boost fuel demand," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
She added that the rally was also driven by geopolitical fluctuations and supply disruption risks associated with conflicts.
"However, I remain cautious. A global supply surplus by the end of 2025 looks almost inevitable as OPEC+ ramps up production," Sachdeva added.
IG Market analyst Tony Sycamore said the market's focus would be on "how many members join Steven Miran in dissenting against a 50 basis point rate cut," whether his forecast implies two or three 25 basis point cuts, and on "the tone of Fed Chair Powell during the press conference."
Any "buy the rumor, sell the fact" reaction to risk assets, including oil, will be short-lived given the possibility of further 25 basis point rate cuts in October and December, Sycamore said.
A potentially optimistic signal for growth is data released on Tuesday showing that US crude and gasoline inventories fell last week, while distillate inventories rose, market sources said, citing American Petroleum Institute data.
Crude inventories fell by 3.42 million barrels and gasoline inventories by 691,000 barrels in the week ended September 12, while distillate inventories rose by 1.91 million barrels from the previous week, sources said.
The market will monitor whether the data released by the US Energy Information Administration on Wednesday will match these figures.
A Reuters poll showed analysts estimated crude inventories fell by about 900,000 barrels last week, distillate inventories rose by about 1 million barrels, and gasoline inventories rose by about 100,000 barrels.