Oil declines amid market balance between US rate cuts and economic concerns

Oil prices fell on Thursday as traders weighed the Federal Reserve’s interest rate cut against lingering concerns over a slowdown in the US economy.

Brent crude futures dropped 30 cents, or 0.4%, to $67.65 a barrel by 09:37 GMT. US West Texas Intermediate (WTI) crude slipped 30 cents, or 0.5%, to $63.75 a barrel.

The Fed cut its benchmark rate by 25 basis points on Wednesday and signaled it would continue lowering borrowing costs gradually through the rest of the year in response to signs of labor market weakness. Lower borrowing costs typically support oil demand and prices.

Kuwaiti oil minister Tareq Al-Roumi said he expects demand for crude to rise following the Fed’s move, especially from Asian markets.

But other analysts were skeptical about any lasting boost. Jorge Montepeque, managing director at Onyx Capital Group, said: “They made this decision now because the economy is clearly slowing. The Fed is trying to restore growth.”

Fed Chair Jerome Powell noted that labor market risks are rising relative to inflation risks, though inflationary pressures still need to be monitored and managed.

The market was also pressured by persistent oversupply and weak fuel demand in the US, the world’s biggest oil consumer.

Data from the Energy Information Administration showed US crude inventories fell sharply last week as net imports dropped to a record low and exports surged to their highest in nearly two years. However, distillate stockpiles rose by 4 million barrels, far above expectations for a 1 million barrel increase, stoking concerns over demand in the US market and weighing on prices.