Oil prices held steady in early trading on Wednesday, after rising more than 1% in the previous session on drone attacks on Russian ports and refineries, while traders awaited an expected rate cut from the US Federal Reserve.
Brent crude futures dropped one cent to US$68.46 (RM286.85) a barrel by 0114 GMT, while US West Texas Intermediate crude futures also fell one cent to US$64.51 a barrel.
Reuters reported on Tuesday that three industry sources said Russia's oil pipeline monopoly Transneft has warned producers that they may have to cut output following Ukraine's drone attacks on critical export ports and refineries.
Oil prices settled more than 1% higher in the last trading session due to concerns Russian supply may be disrupted.
Meanwhile, European Commission president Ursula von der Leyen said on Tuesday that the commission will propose speeding up the phase-out of Russian fossil fuel imports and called for strengthening efforts to increase economic pressure on Russia.
Investors are also awaiting the outcome of the US Federal Reserve's Sept 16–17 meeting, with a new governor Stephen Miran on leave from the Trump administration, joining the deliberations, and a second policymaker, Lisa Cook, still facing efforts by US President Donald Trump to oust her.
The central bank is widely expected to cut interest rates by 25 basis points on Wednesday, which should stimulate the economy and boost fuel demand.
However, the market's focus will be on "how many members join Stephen Miran in dissenting in favour of a 50-basis-point rate cut", whether its outlook indicates two or three 25-basis-point cuts, and "the tone of Fed chair (Jerome) Powell during the press conference", said IG market analyst Tony Sycamore.
Any "buy-the-rumour, sell-the-fact" reaction in risk assets, including crude oil, will be short-lived, given the possibility of follow-up 25-basis-point rate cuts in October and December, Sycamore said.
In a potentially bullish sign, data on Tuesday showed US crude and gasoline stocks fell last week, while distillate stocks rose, market sources said, citing American Petroleum Institute figures.
Crude stocks fell by 3.42 million barrels, and gasoline inventories fell by 691,000 barrels in the week ending Sept 12, while distillate inventories rose by 1.91 million barrels from the prior week, the sources said.
The market will be watching to see whether data from the US Energy Information Administration (EIA) on Wednesday matches that.
A Reuters poll showed that analysts estimated crude inventories fell by about 900,000 barrels last week, distillate stockpiles rose by about one million barrels, and gasoline stockpiles rose by about 100,000 barrels.
Source: theedgemalaysia