Oil prices remained stable in early trading on Wednesday, following a rise of over 1% in the previous session due to drone attacks on Russian ports and refineries, as traders anticipated a forthcoming rate cut from the U.S. Federal Reserve. Brent crude futures decreased by 1 cent, settling at $68.46 a barrel by 0114, while U.S. West Texas Intermediate crude futures similarly declined by 1 cent to $64.51 a barrel.

Reports indicate that on Tuesday, three industry sources revealed that Russia’s oil pipeline monopoly, Transneft has cautioned producers about the potential need to reduce output in light of Ukraine’s drone attacks on vital export ports and refineries. Oil prices concluded the previous trading session with an increase exceeding 1%, driven by apprehensions regarding potential disruptions to Russian supply. On Tuesday, European Commission President Ursula von der Leyen announced that the commission intends to expedite the phase-out of Russian fossil fuel imports and emphasized the need to enhance measures aimed at intensifying economic pressure on Russia. Investors are closely monitoring the developments surrounding the Federal Reserve’s meeting scheduled for September 16-17. The discussions will include the participation of new governor Stephen Miran, alongside the ongoing situation with policymaker Lisa Cook, who continues to contend with attempts by President Donald Trump to remove her from her position.

The central bank is anticipated to reduce interest rates by 25 basis points on Wednesday, a move likely to invigorate the economy and enhance fuel demand. Nevertheless, attention will be directed towards “the number of members aligning with Stephen Miran in dissenting for a 50-basis point rate cut,” the implications of its outlook regarding two or three 25-basis point cuts, and “the demeanor of Fed Chair Powell during the press conference,” as noted by Tony Sycamore. Any “buy-the-rumour, sell-the-fact” reaction in risk assets, including crude oil, is likely to be ephemeral, considering the potential for subsequent 25-basis point rate cuts in October and December. In a potentially bullish development, data released on Tuesday indicated a decline in U.S. crude and gasoline inventories for the previous week, while distillate stocks experienced an increase. Crude stocks experienced a decline of 3.42 million barrels, while gasoline inventories decreased by 691,000 barrels in the week concluding on September 12. In contrast, distillate inventories saw an increase of 1.91 million barrels compared to the previous week.

The market will closely observe whether the data released by the U.S. Energy Information Administration on Wednesday aligns with expectations. Analysts estimates indicated a decline in crude inventories of approximately 900,000 barrels last week, while distillate stockpiles experienced an increase of around 1 million barrels, and gasoline stockpiles saw a rise of about 100,000 barrels.