Crude Prices Down as US Economic Concerns Outweigh Interest Rate Cut

By Adedapo Adesanya

Prices of the crude oil grades were down on Thursday as traders remained worried about the US economic outlook a day after the country’s Federal Reserve cut interest rates for the first time this year.

Brent crude futures fell by 51 cents or 0.8 per cent to settle at $67.44 per barrel and the US West Texas Intermediate (WTI) crude futures declined by 48 cents or 0.8 per cent to sell for $63.57 per barrel.

The Federal Reserve cut its policy rate by a quarter of a percentage point on Wednesday and indicated it would steadily lower borrowing costs over the rest of the year. Lower borrowing costs typically boost demand for oil and push prices higher.

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.

Persistent oversupply and soft fuel demand in the U.S., 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, as data from the Energy Information Administration showed on Wednesday that crude stocks fell by 9.3 million barrels last week to 415.4 million barrels.

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 Russia’s oil and gas sector. Developments that prevent Russian barrels from the international oil market are bullish for prices.

Kuwait, a member of the Organisation of the Petroleum Exporting Countries (OPEC), anticipates an increase in oil demand following the US interest rate cut, with a particular rise expected from Asian markets.

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 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.