Oil prices eased slightly today, after rising more than 1% in the previous session, though ongoing geopolitical jitters provided a floor for the market while traders also awaited an expected interest rate cut from the US Federal Reserve.
Brent crude futures dipped eight cents, or 0.1%, to $68.39 a barrel in early trade, while US West Texas Intermediate crude futures fell six cents, or 0.1%, to $64.46 a barrel.
The benchmarks settled more than 1% higher in the last trading session due to concerns that Russian supplies may be disrupted.
Reuters reported earliert this week that three industry sources said Russia's oil pipeline monopoly Transneft has warned producers they may have to cut output following Ukraine's drone attacks on critical export ports and refineries.
"The market has a laser focus on the geopolitical volatility and potential Russian supply disruptions. Market jitters are still keeping prices elevated," said Emril Jamil, a senior oil analyst at the London Stock Exchange Group.
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, and a second policymaker, Lisa Cook, still facing efforts by President Donald Trump to oust her.
The Fed is widely expected to cut interest rates by 25 basis points tonight, which should stimulate the economy and boost fuel demand.
"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 rally has 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.
IG market analyst Tony Sycamore said the market's focus will be on "how many members join Stephen Miran in dissenting in favour of a 50-basis point rate cut", whether its outlook indicates two or three 25-basis point cuts and "the tone of Fed Chair Powell during the press conference".
In a potentially bullish sign, data yesterday showed US crude and gasoline stocks fell last week, while distillate stocks rose, market sources said, citing American Petroleum Institute figures.
Crude stocks fell by 3.42 million barrels, and gasoline inventories fell by 691,000 barrels in the week ending September 12, while distillate inventories rose by 1.91 million barrels from the prior week, the sources said.
The market will be watching to see whether data from the US Energy Information Administration today matches that.
A Reuters poll showed analysts estimated crude inventories fell by about 900,000 barrels last week, distillate stockpiles rose by about 1 million barrels and gasoline stockpiles rose by about 100,000 barrels.
