LONDON (Reuters): Oil fell more than 1% on Wednesday, losing ground for a third straight session on hopes of a ceasefire agreement in the Middle East and by rising crude inventories and production in top consumer the United States.

Expectations that a ceasefire agreement between Israel and Hamas could be in sight have grown following a renewed push led by Egypt, even as Israeli Prime Minister Benjamin Netanyahu has vowed to go ahead with a long-promised assault on Rafah.

Brent crude futures for July fell 95 cents to $85.38 a barrel, while U.S. West Texas Intermediate crude futures for June dropped $1.16 to $80.77 at 0810 GMT. Both benchmarks were down more than 1%.

"The crude market is weighed down by continued hopes for a ceasefire," said Ole Hansen of Saxo Bank.

"In addition, stubborn U.S. inflation has further reduced rate cut expectations."

U.S. Federal Reserve officials are concluding their latest two-day policy meeting on Wednesday and are expected to hold interest rates steady. A rate cut would act as a boost to economic growth and fuel demand.

"Continued signs of inflation also raised concerns about demand for crude oil. This comes ahead of the U.S. driving season, where demand for gasoline rises strongly," ANZ analysts said in a report on Wednesday.

Further weighing on prices were separate reports that U.S. crude inventories rose and production increased.

U.S. crude inventories rose 4.906 million barrels in the week ended April 26, according to market sources citing American Petroleum Institute figures, which defied expectations for a decline of 1.1 million barrels.

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Traders will be waiting to see if official data from the Energy Information Administration (EIA) at 1430 GMT confirms the trend.

On Tuesday, the EIA said U.S. production rose to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January, its biggest monthly increase in about 3-1/2 years.

Islamabad: President Asif Ali Zardari has called an important session today (Wednesday).

According to the details, the session will be held in Bilawal house at 4pm today in Karachi in which federal interior minister Mohsin Naqvi will also be attending the session.

However, it is likely to consider that the session has summoned on the situation regarding the law and order. The chief minister Sindh Murad Ali Shah, inspector generals including all the officials will be attending the session.

The discussion will be conducted in the session on the matters of country’s security situation and including others.

Lahore: The governor Khyber Pakhtunkhwa (KP) Haji Ghulam Ali has met with Pakistan Muslim League-Nawaz’s (PML-N) supremo Mian Muhammad Nawaz Sharif.

According to the details, Haji Ghulam Ali reached to Nawaz Sharif’s residence in Jati Omra and met with him there.

On this occasion, the chief minister Punjab Maryam Nawaz was also present there.

In the meeting, the dialogues were exchanged on the matters of mutual interest between the both leaders.