Oil prices eased today, after rising more than 1% in the previous session, as investors assessed Russian supply risks following Ukrainian drone attacks on energy infrastructure.
Brent crude futures were down 27 cents, or 0.4%, to $68.20 a barrel this afternoon while US West Texas Intermediate crude futures were down 31 cents, or around 0.5%, to $64.21 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.
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, three industry sources told Reuters.
"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," he added.
Investors are also awaiting the outcome of the US Federal Reserve's September 16–17 meeting, when the Fed is expected to cut interest rates by 25 basis points.
Market sources citing American Petroleum Institute figures said that US crude and gasoline stocks fell last week, while distillate stocks rose.
Focus is also on stockpile data from the US Energy Information Administration - a Reuters poll of nine analysts estimated crude inventories fell while distillate and gasoline stockpiles rose.
On the supply side, Kazakhstan resumed oil supplies via the Baku-Tbilisi-Ceyhan pipeline on September 13, state energy company Kazmunaygaz said today. Supplies via the route were suspended last month amid contamination issues.
