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U.S. crude stocks fall, gasoline and distillate build, EIA

says

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Middle East tensions in focus after pager blasts

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Coming up: US Fed interest rate decision

(Recasts, updates to show prices have turned negative)

By Laila Kearney

NEW YORK, Sept 18 (Reuters) - Oil prices fell on

Wednesday as the market cautiously awaited a rate cut

announcement from the Federal Reserve, while investors digested

a mixed crude and fuel storage report out of the United States.

Brent crude futures for November lost 55 cents, or

0.8%, at $73.15 a barrel at 11:58 a.m. EDT (1558 GMT). U.S.

crude futures for October shed 53 cents, or 0.7%, to

$70.66.

Crude inventories fell by 1.6 million barrels to 417.5

million barrels in the week ending Sept. 13, the Energy

Information Administration (EIA) said, compared with analysts'

expectations in a Reuters poll for a 500,000-barrel draw.

While the EIA's report was more supportive of oil prices

than Tuesday's American Petroleum Institute figures, investors

likely considered the crude drawdown to be affected by last

week's hurricane Francine, a short-lived event, said Bob Yawger,

director of energy futures at Mizuho bank.

"It's a hurricane report to a certain degree," said Yawger,

who added that a slowdown in crude input to refineries last week

kept prices lower.

Gasoline and distillate inventories, meanwhile, rose

slightly last week.

"Minimal movement in gasoline and distillate inventories

means all eyes shift now to the Fed rate decision," said Matt

Smith, analyst at Kpler.

The Federal Reserve is expected to make its first interest

rate cut in more than four years at 1800 GMT, with markets

pricing in a 63% chance of a 50 basis-point reduction.

"Probably the uncertainty of the magnitude of the likely Fed

rate cut later today is also keeping investors cautious," said

UBS analyst Giovanni Staunovo.

Brent has staged a recovery since falling below $70 to its

lowest since December 2021 on Sept. 10. It faces resistance at

around $75 due to weak global refinery margins that signal

sluggish demand, he added.

Earlier in the session, oil found some support from risks of

increased violence in the Middle East disrupting supply after

Hezbollah accused Israel of attacking the militant group with

explosive-laden pagers in Lebanon. Hezbollah promised to

retaliate against Israel, whose military declined to comment on

the blasts.

"The end of peak summer demand and a negative shift in

traders' sentiment have contributed to the price drop, though

potential conflicts in the Middle East still pose a risk of

supply disruptions," said Mazen Salhab, Chief Market Strategist

MENA at BDSwiss.