"Their comments seem to suggest that they are going to cut spending in September, and that hurts risk assets like oil," said Bob Yawger, director of energy futures for Mizuho Securities USA Inc in New York.
The prices of oil and other commodities have been supported by the Fed's bond-buying program, designed to boost the economy.
YEMEN EVACUATION, PROJECTED INVENTORY REDUCTIONS
Oil's decline was checked by news that Washington told U.S. citizens in Yemen to leave that country immediately due to the threat of potential attacks from militants. That pushed Washington to shut diplomatic missions across the Middle East, and to airlift some personnel from Yemen on Tuesday.
"The latest terror warning issued by the U.S. for North Africa and the Middle East are likely to preclude any sharper fall in prices," Commerzbank oil analyst Carsten Fritsch said.
Losses were also limited by expectations that U.S. crude and gasoline stockpiles fell last week.
A Reuters poll of oil industry analysts, ahead of weekly inventory reports from the American Petroleum Institute (API) and the U.S. Energy Information Administration, forecast on Tuesday a drop in crude stocks of 1.2 million barrels in the week ended Aug. 2.
The drop, which was steeper than originally predicted, would mean that U.S. crude oil inventories are 3.7 million barrels smaller than what they were this time last year.
In the previous week, U.S. crude inventories rose 431,000 barrels to about 365 million barrels. The API report is released at 4:35 p.m. EDT on Tuesday (2035 GMT).