LONDON, Sept 17 — Oil prices eased on Wednesday, after rising more than one per cent in the previous session, though ongoing geopolitical jitters provided a floor for the market, with traders eyeing an expected interest rate cut from the United States (US) Federal Reserve (US Fed) later in the day.
Brent crude futures were down ¢62, or 0.9 per cent, to US$67.85 a barrel at 1042 GMT, while U.S. West Texas Intermediate crude futures were down ¢63, or around one per cent, to US$63.89 a barrel.
The benchmarks settled more than one per cent higher in the last trading session due to concerns that Russian supplies may be disrupted by Ukrainian attacks.
On Tuesday, Reuters reported 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.
"If the drone damage (to Russian energy infrastructure) proves to be short-lived, the recent range of say, US$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," said PVM Oil Associates analyst John Evans.
Peskov says EU plans will not affect Russia
On Wednesday, Kremlin spokesman Dmitry Peskov said the European Union's (EU) plans to phase out Russian energy and commodities more quickly will not affect Russia.
Despite sanctions already in place, the EU still imports billions of euros' worth of Russian energy and commodities, ranging from liquefied natural gas to enriched uranium, though its imports of Russian oil and gas have plummeted.
Investors are also awaiting the outcome of the US Fed's September 16 to September 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 US Fed rate cut, which could ease borrowing costs and boost fuel demand, traders will be watching for remarks from US Fed Chair Jerome Powell.
Market sources citing American Petroleum Institute figures said that US crude and gasoline stocks fell last week, while distillate stocks rose.
The market is also awaiting stockpile data from the US 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
"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," said IG Group chief market analyst Chris Beauchamp.
