Geopolitical tensions in the Middle East, Africa and Europe continued to underpin prices, although so far there has been no major disruption to oil supplies.
Brent crude, which has been trading between $106 and $109 over the past two weeks, slipped $0.18 to $107.54 per barrel by Wednesday morning.
US crude rose $0.17 cents to $101.14 per barrel.
“Hopefully we’ll get some action tonight or from what’s coming up this Friday,” Ayers Alliance Securities chief investment officer Jonathan Barratt told Reuters.
He added that if the US economy requires less stimulus, that could translate into more demand for oil and lift prices.
The Fed is expected to cut its monthly bond-buying program by another $10 billion and its policy statement, together with key jobs data on Friday, could provide some hints on how well the world’s largest economy is doing.
“I do feel that $106.50 to $107.50 is a very good support for Brent and we really need some definition to see a break through these levels,” Barratt said.
Investors took news of further sanctions by the European Union and the US against Russia in stride, while waiting to see how President Vladimir Putin would react.
The latest sanctions which cover the energy sector may slow down oil exports from Russia, Newedge Japan commodity sales manager Yusuke Seta told Reuters.
Continued fighting in the Middle East and Africa hotspots supported oil prices.
Israel intensified its assault on Gaza although conflicts in OPEC producers Iraq and Libya have yet to impact oil production.
Libya has kept its oil output at around 500,000 barrels per day despite escalating violence in Tripoli, an official from the Libyan Oil Ministry said on Tuesday.
In the US, industry data showing a bigger-than-expected fall in crude inventories offset the impact on oil prices from a refinery fire.
Data from industry group the American Petroleum Institute showed that crude inventories fell by 4.4 million barrels in the week to 25 July to 369.4 million, versus analysts’ expectations for a drop of 1.5 million barrels.
The US Department of Energy’s Energy Information Administration will release its own weekly petroleum stockpiles data later on Wednesday.