LONDON: Oil prices eased on Wednesday after rising more than 1% in the previous session, though ongoing geopolitical concerns provided a floor for the market. Traders were also awaiting an expected interest rate cut from the US Federal Reserve later in the day.
Brent crude futures fell 41 cents, or 0.6%, to $68.06 a barrel, while US West Texas Intermediate crude dropped 37 cents, or 0.6%, to $64.15 a barrel.
Benchmarks had gained more than 1% in the previous session due to fears that Russian supplies might be disrupted by Ukrainian attacks. Three industry sources said Russia's pipeline monopoly Transneft had warned producers they might need to cut output following drone attacks on export ports and refineries.
Analyst John Evans of PVM Oil Associates said, "If the drone damage proves short-lived, the recent range of say, $5 per barrel, will resume. 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 were also watching the outcome of the Federal Reserve's September 16–17 meeting. While markets largely priced in a 25-basis-point rate cut, traders were monitoring comments from Fed Chair Jerome Powell. Market sources citing American Petroleum Institute figures reported that US crude and gasoline stocks fell last week, while distillate stocks rose.
Chris Beauchamp, chief market analyst at IG Group, said: "Reports of large funds piling in with bearish bets show that glut fears remain, making gains hard to sustain. While Russia has tested Nato's resolve, tensions seem contained, which could make a test of recent lows more likely". — Reuters
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