TOKYO, Aug 14 (Reuters) - Oil prices edged higher on

Thursday, regaining ground after a sell-off in the previous

session, with the upcoming meeting between U.S. President Donald

Trump and his Russian counterpart Vladimir Putin raising risk

premiums in the market.

Brent crude futures were up 28 cents, or 0.43%, at

$65.91 a barrel at 0057 GMT, while U.S. West Texas Intermediate

crude futures rose 23 cents, or 0.37%, to $62.89.

Both contracts hit their lowest in two months on Wednesday

after bearish supply guidance from the U.S. government and the

International Energy Agency (IEA).

Trump on Wednesday threatened "severe consequences" if

Putin does not agree to peace in Ukraine. Trump did not specify

what the consequences could be, but he has warned of economic

sanctions if the meeting in Alaska on Friday proves fruitless.

"The uncertainty of U.S.-Russia peace talks continues to add

a bullish risk premium given Russian oil buyers could face more

economic pressure," Rystad Energy said in a client note.

"How Ukraine-Russia crisis resolves and Russia flows change

could bring some unexpected surprises."

Another support for oil is that the expectation that the

U.S. Federal Reserve will cut rates in September is at close to

100% after U.S. inflation increased at a moderate pace in July.

Treasury Secretary Scott Bessent said he thought an

aggressive half-point cut was possible given recent weak

employment numbers.

The market is putting the odds of a quarter-percentage point

cut at the Fed's September 16-17 meeting at 99.9%, according to

the CME FedWatch tool.

Lower borrowing rates would drive demand for oil. The dollar

was hovering near multi-week lows against the euro and sterling

on Thursday as traders ramped up bets for the Fed to resume

cutting interest rates next month.

Oil prices were kept in check as crude inventories in the

United States unexpectedly rose by 3 million barrels in the week

ended on August 8, according to the U.S. Energy Information

Administration on Wednesday, against expectations in a Reuters

poll for a 275,000-barrel draw.

Also, holding oil back was an International Energy Agency

forecast that 2025 and 2026 world oil supply would rise more

rapidly than expected, as the Organization of the Petroleum

Exporting Countries and its allies, together known as OPEC+,

increase output and production from outside the group grows.