Brent crude futures were down 93 cents to $82.71 a barrel by 1317 GMT, while U.S. West Texas Intermediate (WTI) crude was at $78.68, down 95 cents. Both fell by more than $1 earlier in the session, after hitting three-month highs on Tuesday, Reuters reported.

Oil prices have rallied for four weeks, buoyed by signs of tighter supplies, largely linked to output cuts by Saudi Arabia and Russia, as well as Chinese authorities' pledges to shore up the world's second-biggest economy.

Although the market expects Saudi Arabia to roll over its August output cuts to September, sources told Reuters on Wednesday that Russia is expected to significantly increase oil loading in September, bringing to an end steep export cuts.

Meanwhile, concern is high over whether China, also the world's second-biggest oil consumer, will deliver on its policy pledges.

"We still need to wait for actual policies – the risk is that these policies fall short of expectations," said ING head commodities strategist Warren Patterson.

"The market will continue to be in a tug-of-war between tightening global supply and fears of slowing demand due to the global economic slowdown," Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, added.

Investors had squared their positions ahead of the Fed rate decision, Kikukawa said.

The U.S. central bank is widely expected to deliver a 25-basis-point rate hike later on Wednesday.

"Today’s rate hike, if it occurs, is widely anticipated to be the last one before a long pause, yet Fed officials will be very wary of raising false hopes of calling a day on the unprecedented monetary tightening programme," said PVM analyst Tamas Varga.

On Tuesday, market sources, citing American Petroleum Institute figures, indicated U.S. crude stocks rose by about 1.32 million barrels in the week ended July 21. Analysts polled by Reuters had expected a 2.3-million-barrel drawdown.

The surprise build in crude and distillate stocks – if confirmed by U.S. government data later today, added Varga, "could temporarily take the wind out of the bull’s sail".