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 Oil prices traded in a narrow range early on Wednesday as investors remained cautious ahead of an expected interest rate cut by the U.S. Federal Reserve.

Brent futures inched up 12 cents, or 0.16%, to $73.31 a barrel by 0134 GMT, while U.S. West Texas Intermediate crude rose 11 cents, or 0.16%, to $70.19 a barrel.

The Fed on Wednesday is widely expected to cut interest rates for the third time since its policy easing cycle began.

More important for the oil market will be any comments on interest rate moves in 2025, analysts say.

"Projections for rate cuts in 2025 are being second-guessed, especially with Trump planning a comeback on January 20. There is a prevailing narrative that Trump's policies may lead to inflation, which, coupled with concerns about potential interference with the Federal Reserve's autonomy, is causing oil investors to remain cautious," said Priyanka Sachdeva, senior market analyst with Phillip Nova.

Lower rates decrease borrowing costs, which can boost economic growth and demand for oil.

The European Union on Tuesday adopted a 15th package of sanctions against Russia over its invasion of Ukraine, adding an additional 33 vessels from Russia's shadow fleet used for transporting crude or petroleum products. Britain also sanctioned 20 ships for carrying illicit Russian oil.

The fresh sanctions could stoke further oil price volatility though so far they have not succeeded in shutting Russia out of the global oil trade.

In the U.S., American Petroleum Institute data on Tuesday showed that crude stocks fell by 4.69 million barrels in the week ended Dec. 13, a source said. Gasoline inventories rose by 2.45 million barrels, and distillate stocks rose by 744,000 barrels, according to the source.

Analysts projected U.S. energy firms pulled about 1.6 million barrels of crude from storage during the week ended Dec. 13, according to a Reuters poll on Tuesday.

The U.S. Energy Information Administration will release its oil storage data on Wednesday.