Oil futures declined slightly on Thursday as market participants weighed the implications of the Federal Reserve’s latest interest rate cut against persistent concerns about the strength of the U.S. economy. Brent crude slipped by 30 cents, or 0.4%, to $67.65 per barrel by 0937 GMT, while West Texas Intermediate (WTI) fell by the same amount, or 0.5%, to $63.75.
The Fed lowered its benchmark rate by 25 basis points the previous day, marking the beginning of a projected easing cycle aimed at supporting economic growth amid signs of labor market softening. While lower borrowing costs typically stimulate energy demand and support higher oil prices, traders remained cautious due to underlying economic fragility.
Jorge Montepeque, managing director at Onyx Capital Group, noted that the rate reduction signals a recognition of slowing economic momentum. “They did this now because clearly the economy is slowing down,” he said. “The Federal Reserve is trying to restore growth.”
Despite the policy shift, demand outlooks remain uncertain. The U.S., the world’s largest oil consumer, continues to face weak fuel consumption and an oversupplied market. However, recent data from the Energy Information Administration revealed a sharp drop in crude stockpiles, driven by a record low in net imports and a surge in exports reaching near two-year highs.
Kuwait’s oil minister, Tariq Al-Roumi, expressed optimism, anticipating stronger demand—particularly from Asian economies—following the Fed’s move. Yet some analysts remain skeptical about the immediate impact on global consumption patterns.
Federal Reserve Chair Jerome Powell acknowledged growing risks to employment, though he emphasized that inflation monitoring remains a priority. The balance between stimulating growth and controlling price increases continues to shape market expectations.
— news from Reuters
— News Original —
Oil edges lower as traders weigh rate cut with worries over US economy
LONDON, Sept 18 (Reuters) – Oil prices edged lower on Thursday after the Federal Reserve cut interest rates as traders weighed the start of looser monetary policy against concerns about the U.S. economy. n nBrent crude futures were down 30 cents, or 0.4%, at $67.65 a barrel by 0937 GMT. U.S. West Texas Intermediate futures edged down 30 cents, or 0.5%, to $63.75. n nSign up here. n nThe Fed cut its policy rate by a quarter of a percentage point on Wednesday and indicated it will steadily lower borrowing costs over the rest of the year, responding to signs of weakness in the jobs market. n nLower borrowing costs typically boost demand for oil and push prices higher. n nKuwait ‘s oil minister Tariq Al-Roumi said he anticipates an increase in oil demand following the recent U.S. interest rate cut, with a particular rise expected from Asian markets. n nSome analysts were more sceptical about a positive impact on oil prices. n n”They did this now because clearly the economy is slowing down,” said Jorge Montepeque, managing director at Onyx Capital Group. “The Federal Reserve is trying to restore growth.” n nFederal Chair Jerome Powell said there were rising downside risks of employment compared to inflation, but inflation risks still needed to be assessed and managed. n nPersistent oversupply and soft fuel demand in the U.S., the world ‘s biggest oil consumer, also weighed on the market. n nU.S. crude oil stockpiles fell sharply last week as net imports dropped to a record low while exports jumped to a near two-year high, data from the Energy Information Administration showed on Wednesday. n nReporting by Anna Hirtenstein in London. Additional reporting by Katya Golubkova and Siyi Liu in Singapore; Editing by Tom Hogue and Bernadette Baum