08:51 AM EST, 12/18/2024 (MT Newswires) -- Oil traded higher early on Wednesday after a report showed U.S. oil inventories fell by more than expected last week, while a third straight cut to U.S. interest rates from the Federal Reserve is awaited.

West Texas Intermediate crude for January delivery was last seen up US$0.72 to US$70.80 per barrel, while February Brent crude, the global benchmark, was up US$0.60 to US$73.79.

The rise, which follows two days of losses spurred by yet more weak economic data from China, came as the weekly inventory report from the American Petroleum Institute showed U.S. oil stocks fell by 4.7-million barrels. The consensus estimate among analysts polled by Oilprice.com called for a drop of 1.85-million barrels. The Energy Information Administration will release official inventory data later on Wednesday.

"Crude oil steadied after a two-day drop, supported by another seasonal decline in US stockpiles after the API, ahead of today's official data from the EIA, reported a 4.7-million-barrel drop. Continued concerns about the demand outlook in China have otherwise been the focus this week, leading hedge funds to lower bullish bets," Saxo Bank noted.

The rise also comes as investors focus on the afternoon end to the two-day meeting of the Federal Reserve's policy committee. The Federal Open Market Committee is widely expected to make its third cut to interest rates this year and is likely to cut rates by 25 basis points, potentially spurring economic growth which is bullish for oil demand.

"The Fed is unlikely to deviate from the expected 25-basis point cut that is about as 'priced-in' as any decision could be," PVM Oil Associates noted.