Sept 17 (Reuters) - Oil prices held steady in early trading on Wednesday, after rising more than 1% in the previous session on drone attacks on Russian ports and refineries, while traders awaited an expected rate cut from the U.S. Federal Reserve.

Brent crude futures dropped 1 cent to $68.46 a barrel by 0114 GMT, while U.S. West Texas Intermediate crude futures also fell 1 cent to $64.51 a barrel.

Reuters reported on Tuesday that three industry sources said Russia's oil pipeline monopoly Transneft (TRNF_p.MM) has warned producers they may have to cut output following Ukraine's drone attacks on critical export ports and refineries.

Oil prices settled more than 1% higher in the last trading session due to concerns Russian supply may be disrupted.

Meanwhile, European Commission President Ursula von der Leyen said on Tuesday the commission will propose speeding up the phase-out of Russian fossil fuel imports and called for strengthening efforts to increase economic pressure on Russia.

Investors are also awaiting the outcome of the Federal Reserve's September 16-17 meeting, with a new governor, Stephen Miran, on leave from the Trump administration, joining the deliberations, and a second policymaker, Lisa Cook, still facing efforts by President Donald Trump to oust her.

The central bank is widely expected to cut interest rates by 25 basis points on Wednesday, which should stimulate the economy and boost fuel demand.

However, the market's focus will be on "how many members join Stephen Miran in dissenting in favour of a 50-basis point rate cut", whether its outlook indicates two or three 25-basis point cuts and "the tone of Fed Chair Powell during the press conference", said IG market analyst Tony Sycamore.

Any "buy-the-rumour, sell-the-fact" reaction in risk assets, including crude oil, will be short-lived, given the possibility of follow-up 25-basis point rate cuts in October and December, Sycamore said.

In a potentially bullish sign, data on Tuesday showed U.S. crude and gasoline stocks fell last week, while distillate stocks rose, market sources said, citing American Petroleum Institute figures.

Crude stocks fell by 3.42 million barrels, and gasoline inventories fell by 691,000 barrels in the week ending September 12, while distillate inventories rose by 1.91 million barrels from the prior week, the sources said.

The market will be watching to see whether data from the U.S. Energy Information Administration on Wednesday matches that.

A Reuters poll showed analysts estimated crude inventories fell by about 900,000 barrels last week, distillate stockpiles rose by about 1 million barrels and gasoline stockpiles rose by about 100,000 barrels.

Reporting by Sam Li and Lewis Jackson in Beijing; Editing by Sonali Paul

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Lewis Jackson

Thomson Reuters

Lewis is Reuters' Chief Correspondent for China Commodities and Energy, based in Beijing. He leads a team covering agriculture, metals, and energy in the world's largest consumer of commodities. Before moving to China, he wrote for Reuters in Sydney.

Oil prices hold steady as markets await Fed rate decision