SINGAPORE Oil prices fell for a third straight session on Wednesday, on expectations that the Federal Reserve might keep US interest rates higher for longer due to sustained inflation, potentially impacting fuel use in the world's largest oil consumer.

Brent crude futures were down 71 cents, or 0.9%, to US$82.17 a barrel, while US West Texas Intermediate crude (WTI) futures slipped 73 cents, or 0.9%, to US$77.93 as of 0650 GMT.

Oil prices settled about 1% lower on Tuesday.

Fed policymakers said on Tuesday that the US central bank should wait several more months to ensure that inflation really is back on track towards its 2% target, before cutting interest rates.

Higher borrowing costs can slow economic growth and pressure oil demand.

US crude oil and gasoline inventories rose last week, while distillates fell, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

Ahead of this weekend's Memorial Day holiday, which kicks off the US peak summer driving season, retail gasoline prices fell for the fourth consecutive week. US prices of diesel, a key refined product for both the industrial sector and transport, have also slipped.

Investors are awaiting minutes from the Fed's last policy meeting and weekly US oil inventory data from the US Energy Information Administration (EIA) due later on Wednesday.

"The Federal Open Market Committee (FOMC) minutes will be scrutinised for Fed's assessment of bumpy 1Q inflation and clues on the timing and extent of potential interest rate cuts in 2024," ANZ analysts said in a report.

"It's more of a wait and see ‘what the data is telling us’ approach," ANZ said.

The euro zone has all but promised a rate cut on June 6, amid more positive economic outlook. European Central Bank president Christine Lagarde said in an interview aired on Tuesday that she was "really confident" that the euro zone inflation was under control.

  - Reuters