Oil Prices Ease Lower As Investors Await Federal Reserve Decision on Interest Rates

Oil prices eased on Wednesday after data showing an increase in U.S. diesel stockpiles stoked worries about demand, while investors awaited the U.S. Federal Reserve's decision on interest rates.

Brent crude futures lost 25 cents, or 0.37%, to $68.22 a barrel by 1:20 p.m. EDT (1720 GMT) while U.S. West Texas Intermediate crude futures were down 21 cents, or 0.33%, at $64.31.

U.S. crude inventories fell sharply last week with a jump in exports and a sharp decline in imports, the Energy Information Administration said on Wednesday. But the rise in distillate stockpiles stoked demand concerns and kept a lid on prices, analysts said.

"Looks like markets are responding on diesel, which is the soft underbelly of the entire complex," said Phil Flynn, a senior analyst at Price Futures Group.

Investors were awaiting the policy statement at the close of the Fed's two-day meeting, due to be released at 2 p.m. ET (1800 GMT), with expectations the U.S. central bank will cut interest rates by a quarter of a percentage point.

On the supply side, Kazakhstan resumed oil supplies through the Baku-Tbilisi-Ceyhan pipeline on September 13, state energy company Kazmunaygaz said on Wednesday. Supplies were suspended last month because of contamination issues.

In Nigeria, President Bola Tinubu on Wednesday lifted a six-month emergency rule in Rivers, a state located in the hub for Nigeria's crude exports.

Russian oil supply risks were also in focus after Ukraine's attacks on Russia's energy infrastructure intensified in recent weeks.

Russia's oil pipeline monopoly Transneft warned producers they might have to cut output after Ukraine's drone attacks on critical export ports and refineries, three industry sources told Reuters on Tuesday.

(Reuters)