© Reuters. FILE PHOTO: A flare burns excess natural gas in the Permian Basin in Loving County, Texas, U.S. November 23, 2019. REUTERS/Angus Mordant//File Photo

By Robert Harvey

LONDON (Reuters) -Oil prices fell on Wednesday after hitting multi-month highs in the previous session, as investors braced for the U.S. Federal Reserve’s interest rate policy announcement later in the day.

futures for May were down 72 cents or 0.82% at $86.66 a barrel by 1201 GMT. U.S. West Texas Intermediate futures for April delivery, which expire on Wednesday’s settlement, fell 84 cents or 1.01% to $82.63.

The more active May WTI contract was at $81.95 a barrel, down 78 cents or 0.94%.

At their intra-day low the contracts were trading more than $1 lower than previous settlement, but analysts still viewed the market as strong.

“The fundamental backdrop has not changed and remains supportive given the ongoing refinery and export problems from Russia,” PVM analyst Tamas Varga said.

Brent had settled at its highest since Oct. 31 in the previous session at $87.38 a barrel, while WTI hit its highest since Oct. 27 at $83.47.

Ukrainian attacks on Russian refining assets have helped propel crude prices higher as market participants assessed the impact on crude and fuel supply balances.

“If these disruptions are prolonged, it could eventually force Russian producers to reduce supply if they are unable to export all of this crude oil,” ING analyst Warren Patterson said.

Investors are looking ahead to the Federal Reserve’s announcement later on Wednesday for signs of its interest rate path for the rest of the year.

The Fed is not predicted to cut borrowing costs, but fresh economic projections could signal fewer interest rate cuts and a later start to the policy easing than previously expected.

The edged higher ahead of the Fed decision, which can also dent oil demand for buyers in countries using other currencies.

Investors will also be looking ahead to official stockpile data from the U.S. Energy Information Administration at 1430 GMT on Wednesday. [EIA/S]

“Barring any unexpected negative surprises from the Fed or from the EIA this afternoon, the current weakness is not expected to last,” Varga said.

The American Petroleum Institute reported oil and gasoline stockpiles fell last week, while distillate inventories rose, according to sources. [API/S]