(Bloomberg) -- Oil erased earlier losses after US data showed sizable draws in fuel inventories, which came against the backdrop of rising geopolitical tension.

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West Texas Intermediate crude traded near $67 a barrel. Overall US gasoline inventories declined by 527,000 barrels to reach the lowest level since early January. The official data also showed a smaller gain for crude stockpiles than estimated by the American Petroleum Institute

Investors will watch for a Federal Reserve interest-rate decision later Wednesday, plus commentary from Chair Jerome Powell on the economy as President Donald Trump amps up his trade war.

Crude still remains markedly lower from a peak in January, as several bearish drivers combine to pressure prices. On the supply side, OPEC and its allies are preparing to increase production, while the escalating trade frictions are threatening a hit to demand just as consumption in China remains weak.

Economic data “will remain the salient driving force of sentiment and consequently prices,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.

Geopolitical concerns lifted prices on Monday. Trump has pressed Iran to rein in the Houthis, treating attacks from the Yemeni militant group as Tehran’s direct responsibility. Russian President Vladimir Putin, meanwhile, declined the US president’s bid for a ceasefire in Ukraine, agreeing instead to limit attacks on the country’s energy infrastructure.

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