Oil jumped roughly 2% Wednesday before giving up those gains ahead of a Federal Reserve rate decision.

Markets were widely anticipating Fed officials will keep interest rates unchanged after an aggressive tightening cycle that started last year.

US crude stockpiles rose by 773,000 barrels last week according to data from the Energy Information Administration. The rise in inventories put pressure on the oil prices.

West Texas Intermediate (CL=F) and Brent (BZ=F) crude futures settled at $80.44 and $84.63 per barrel, respectively, during the morning session.

Tensions in the Middle East are keeping oil prices volatile. Daily price moves of more than 2% in either direction have become a common occurrence since Hamas' surprise attack on Israel last month.

On Tuesday the World Bank warned oil prices could surge to as much as $157 per barrel under a “large disruption” risk scenario spurred by a broadening conflict.

Meanwhile, prices at the pump continue a downward trend amid lower seasonal demand and less expensive winter-grade gasoline.

The national average for a gallon of gasoline sat at $3.46 on Wednesday, down $0.35 from one month ago, according to AAA.

Earlier last month, Tom Kloza, head of energy analysis at OPIS, predicted gas prices would drop "like wet feathers."

"We're looking at a $0.25- to $0.50-per-gallon drop in retail that is virtually certain," he noted. "It's a glacial pace but it will be quite noticeable."

Californians are still paying some of the highest prices compared to other states. The average price of gasoline in the Golden State was at $5.23 per gallon, down from $6.06 per gallon one month ago.

Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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