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Concerns over potential Russian supply disruption support

prices

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Markets eye Fed meeting for clues on economy

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US crude stockpiles fell last week, industry data shows

(Changes dateline to LONDON, adds analyst comment, updates

prices)

By Seher Dareen and Jeslyn Lerh

LONDON, Sept 17 (Reuters) - Oil prices eased on

Wednesday, after rising more than 1% in the previous session,

though ongoing geopolitical jitters provided a floor for the

market, with traders eyeing an expected interest rate cut from

the U.S. Federal Reserve later in the day.

Brent crude futures were down 33 cents, or 0.5%, to

$68.14 a barrel at 0810 GMT, while U.S. West Texas Intermediate

crude futures were down 32 cents, or 0.5%, to $64.20 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.

"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."

Reuters reported on Tuesday that three industry sources said

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.

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.

"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 oil rally had 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.

On the supply side, market sources citing American Petroleum

Institute figures said that U.S. crude and gasoline stocks fell

last week, while distillate stocks rose.

The market will also be awaiting data from the U.S. Energy

Information Administration - a Reuters poll of nine analysts

estimated crude inventories fell while distillate and gasoline

stockpiles rose.