Oil prices fell on Friday as worries about fuel demand in the United States outweighed expectations that the first interest rate cut this year by the U.S. Federal Reserve would spur greater consumption.
Brent crude futures were down 15 cents, or 0.2 per cent, at $67.29 a barrel at 0432 GMT, and U.S. West Texas Intermediate futures were down 23 cents, or 0.4 per cent, at $63.34.
Both benchmarks were still on track to end higher for a second straight week.
The Fed cut its policy rate by a quarter of a percentage point on Wednesday and indicated more cuts would follow as it responded to signs of weakness in the jobs market.
Lower borrowing costs typically boost demand for oil and push prices higher.
“The market has been caught between conflicting signals. On the demand side, all energy agencies, including (the Energy Information Administration), have signalled concern about weakening demand, tempering expectations of significant near-term price upside,” said Priyanka Sachdeva, an analyst at Phillip Nova.
“On the supply side, planned production increases from OPEC+ and signs of oversupply in U.S. fuel-product inventories are weighing on sentiment,” she said.
An increase in U.S. distillate stockpiles by 4 million barrels, against market expectations of a gain of 1 million barrels, raised worries about demand in the world’s top oil consumer and pressured prices.
Economic data also added to concerns. Joblessness claims data released this week indicated the U.S. labour market has softened, with both demand for and supply of workers falling, while single-family home building plunged to a near 2-1/2-year low in August amid a glut of unsold new houses.
In Russia, the world’s second-biggest producer of crude in 2024 after the United States, the Finance Ministry announced a new measure to shield the state budget from oil price fluctuations and Western sanctions, easing some supply concerns.
“President Trump’s comment that he preferred low prices over sanctions on Russia also eased concerns over supply disruptions,” ANZ analyst Daniel Hynes said in a note on Friday.
