Oil prices declined on Friday as concerns over fuel demand in the United States outweighed optimism from the Federal Reserve’s first interest rate cut of the year, which was expected to stimulate consumption.
By 0656 GMT, Brent crude futures were down 17 cents, or 0.3%, at $67.27 a barrel, while U.S. West Texas Intermediate (WTI) futures fell 19 cents, also 0.3%, to $63.38. Despite the drop, both benchmarks were poised to finish higher for the second consecutive week.
The Fed cut its policy rate by 25 basis points on Wednesday and signaled that further reductions could follow in response to signs of softness in the labor market. Lower borrowing costs typically encourage higher oil demand, which can push prices up.
“The market has been caught between conflicting signals,” said Priyanka Sachdeva, an analyst at Phillip Nova.
She noted that on the demand side, warnings from all major energy agencies, including the Energy Information Administration, about weakening consumption have tempered expectations for near-term price gains.
“On the supply side, planned production increases from OPEC+ and signs of oversupply in U.S. fuel-product inventories are weighing on sentiment.”
U.S. distillate stockpiles rose by 4 million barrels, far exceeding the 1 million barrels expected, intensifying worries about demand in the world’s largest oil consumer and putting further pressure on prices.
Economic data added to the bearish sentiment. Jobless claims this week indicated a softer labor market, with reductions in both demand for and supply of workers, while single-family homebuilding fell to a near 2-1/2-year low in August amid a surplus of unsold homes.
In Russia, the world’s second-largest crude producer in 2024 after the United States, the finance ministry introduced a measure to shield the state budget from oil price swings and Western sanctions, easing some supply concerns.
“President Trump’s comment that he preferred low prices over sanctions on Russia also eased concerns over supply disruptions,” ANZ analyst Daniel Hynes said in a note on Friday.
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