Oil prices steadied in Asian trade on Wednesday after clocking strong gains in recent sessions on heightened concerns over disruptions in Russian production, with focus now squarely on the conclusion of a U.S. Federal Reserve meeting.
Crude prices were perched at two-week highs as Russia and Ukraine launched a series of debilitating strikes against each other. Kyiv was seen targeting Moscow’s energy infrastructure, with Reuters reporting that Russian producers may have to cut output due to Ukraine’s attacks.
Brent oil futures for November fell 0.1% to $68.39 a barrel, while West Texas Intermediate crude futures fell 0.1% to $64.09 a barrel by 21:48 ET (01:48 GMT).
Oil was also encouraged by U.S. industry data showing an outsized, 3.2 million barrel draw in inventories over the week to September 12. The data-- from the American Petroleum Institute-- usually heralds a similar reading from official inventory data, which is due later on Wednesday.
Fed rate decision awaited, weak dollar benefits crude Oil took some support from a weakening dollar over the past week, as markets priced in growing confidence that the Fed will cut interest rates later on Wednesday.
The central bank is widely expected to cut interest rates by 25 basis points, with a small portion of traders also holding out for a 50 bps cut.
Expectations of a cut also offered some support to oil markets, given that lower rates tend to boost economic activity and support fuel demand.
But markets still remained largely cautious over just what the Fed will signal on future rate cuts, given that the central bank has repeatedly said that sticky inflation will deter any more monetary easing.
Oil buoyed by fears of Russian supply disruptions Oil prices rose to two-week highs on Tuesday amid increasing bets that the Russia-Ukraine war will disrupt Moscow’s oil supplies, especially as Kyiv battered Russian energy infrastructure in recent weeks.
Russia’s oil pipeline giant Transneft had warned that producers may have to cut output following a slew of Ukrainian drone attacks on major Russian ports and refineries, Reuters reported this week.
Russia is also facing heightened western scrutiny over its long-running war with Ukraine. U.S. President Donald Trump was seen calling for higher trade tariffs against major buyers of Russian crude, chiefly China and India.
Any confirmed disruptions in Russian supplies stand to tighten the outlook for oil markets in the coming quarters, and could offset expectations of a looming supply glut.
Fears of oversupplied markets had battered oil prices in August.
