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Oil prices slipped on Friday, September 19, as worries about weakening U.S. fuel demand outweighed expectations that the Federal Reserve’s first rate cut of the year would boost consumption, Reuters reported.
Brent crude futures dropped by 15 cents, or 0.2%, to $67.29 per barrel, while West Texas Intermediate (WTI) crude fell 23 cents, or 0.4%, to $63.34 per barrel. Despite the pullback, both benchmarks remained on track to post a second consecutive week of gains.
On Wednesday, the Federal Reserve cut its benchmark interest rate by a quarter percentage point and signaled the possibility of further reductions in response to signs of softening in the U.S. labor market.
“The market is caught between conflicting signals. All major energy agencies, including the U.S. Energy Information Administration, have expressed concerns over weakening demand, which has tempered expectations for a strong price rally in the near term,” said Priyanka Sachdeva, an analyst at Phillip Nova.
On the supply side, planned OPEC+ production increases and signs of excess U.S. fuel inventories have also weighed on sentiment, she added.
U.S. distillate stockpiles rose by 4 million barrels, far above market expectations of a 1 million barrel increase, raising concerns over demand in the world’s largest oil consumer.
Economic data added to the cautious outlook: jobless claims signaled labor market weakness, while U.S. single-family housing starts in August fell to a nearly 2.5-year low amid an oversupply of unsold new homes.
Meanwhile, in Russia, the Finance Ministry announced a new measure to protect the state budget from oil price fluctuations and Western sanctions, easing some supply concerns.
“President Trump’s comment that he prefers low oil prices over imposing new sanctions on Russia has also reduced fears of supply disruptions,” said Daniel Hynes, an analyst at ANZ, in a Friday note.
