Oil Prices Decline Due to Demand Concerns Despite U.S. Rate Cut
Oil prices fell on Friday, September 19, affected by concerns over weak fuel demand in the United States, which overshadowed the positive effects of the U.S. rate cut, the first of its kind this year.
By 04:32 GMT, Brent crude had dropped by 15 cents (equivalent to 0.2%) to reach $67.29 per barrel, while West Texas Intermediate crude fell by 23 cents (0.4%) to $63.34 per barrel.
Despite this decline, both benchmark crude oils are on track to record weekly gains for the second consecutive week.
This comes after the Federal Reserve's decision last Wednesday to cut rates by a quarter percentage point, indicating the possibility of further monetary easing to address labor market weakness, a step that typically stimulates consumption and increases demand for oil.
Commenting on the situation, analyst Priyanka Sachdeva from Phillip Nova said: "There are conflicting indicators putting pressure on the market. All parties, including the Energy Information Administration, have expressed concerns about weak demand, which limits expectations for price increases."
Sachdeva added that "planned production increases from 'OPEC+' and the surplus of U.S. fuel inventories continue to pressure the market."
Recent data has heightened analysts' concerns, as U.S. distillate inventories surged by about 4 million barrels last week, compared to expectations of only a 1 million barrel increase, raising worries about demand strength in the world's largest oil consumer.
Data on unemployment claims also showed weakness in the U.S. labor market, with a decline in labor demand and a drop in housing construction activity to its lowest level in two and a half years.
In related news, geopolitical developments have eased speculators' concerns. In Russia, the Ministry of Finance announced a new mechanism to protect the budget from oil price fluctuations and Western sanctions, contributing to calming supply fears. U.S. President Donald Trump also stated that he "prefers low oil prices over imposing sanctions on Russia," which in turn reduced concerns about potential supply disruptions.
