[NEW YORK] Oil prices eased on Thursday, settling lower as traders remained worried about the US economic outlook a day after the US Federal Reserve cut interest rates for the first time this year.
Brent crude futures fell 51 cents, or 0.8 per cent, to settle at US$67.44. US West Texas Intermediate (WTI) crude fell 48 cents, or 0.8 per cent, to settle at US$63.57.
The 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.
Lower borrowing costs typically boost demand for oil and push prices higher.
“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.”
The number of Americans filing new applications for unemployment benefits fell last week, reversing the prior week’s jump, but the labour market has softened as both the demand for and supply of workers have diminished.
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US single-family home building plunged to a near 2-1/2-year low in August amid a glut of unsold new houses, suggesting the housing market could remain an economic headwind.
Persistent oversupply and soft fuel demand in the US, the world’s biggest oil consumer, also weighed on the market.
US 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.
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A rise in US distillate stockpiles by 4 million barrels, however, against market expectations of a gain of 1 million barrels, raised worries about demand in the world’s top oil consumer and pressured prices.
Demand worries offset supply concerns
In Russia, the world’s second biggest producer of crude in 2024 after the US, the Finance Ministry announced a new measure to shield the state budget from oil price fluctuations and Western sanctions targeting Russian energy exports.
Ukraine said its drones struck a major oil-processing and petrochemical complex and an oil refinery in Russia, part of an intensifying campaign to disrupt Moscow’s oil and gas sector.
Exxon Mobil CEO Darren Woods told the Financial Times in an interview that the US oil major has no plans to resume operations in Russia.
Anything that keeps Russian barrels out of the international oil market should be bullish for prices.
Kuwait’s oil minister, Tariq Al-Roumi, however, said he anticipates an increase in oil demand following the US interest rate cut, with a particular rise expected from Asian markets.
Kuwait is a member of the Organization of the Petroleum Exporting Countries (Opec).
In Qatar, another member of Opec, state-owned QatarEnergy hiked the term price for al-Shaheen crude oil loading in November to the highest in eight months.
In Germany, the biggest economy in Europe, parliament approved the nation’s first annual budget since sweeping reforms to loosen fiscal rules were passed earlier this year, securing record investments to revive the economy while committing to an increase in defense spending.
In the Middle East, Israel launched fresh air strikes against Hezbollah military targets in south Lebanon to stop the militant group from rebuilding in the area. REUTERS
