Benchmark Brent crude prices fell 0.5% to $67.56 per barrel, while U.S. West Texas Intermediate prices also declined 40 cents to $63.64 per barrel at 3.42 a.m. ET.
Oil prices fell on Thursday as investors dissected U.S. crude inventory data after an expected rate cut by the U.S. Federal Reserve.
Benchmark Brent crude prices fell 0.5% to $67.56 per barrel, while U.S. West Texas Intermediate prices also declined 40 cents to $63.64 per barrel at 3.42 a.m. ET. Retail sentiment on Stocktwits about the United States Oil Fund (USO) was in the ‘bullish’ territory at the time of writing.
The U.S. Federal Reserve delivered a widely anticipated 25-basis-point rate cut on Wednesday, following recent labor market weakness. However, markets remain divided on how many future rate cuts the Fed might announce this year.
In his press conference, Powell emphasized the central bank’s tough ask of balancing its goal in an unusual situation, although he expressed concerns about the weakening labor market. Earlier in his speech, he called the September cut a “risk-management” cut, with the market interpreting the phrase as meaning “meeting-by-meeting” decision on future cuts.
“What caught markets’ attention was not just the easing, but Powell’s downbeat message,” Phillip Nova analyst Priyanka Sachdeva said, according to a Reuters report, after saying that markets have already priced in two more rate cuts this year.
“He stressed weakening job markets and inflation that remains sticky, making the cut look more like risk-management than a demand booster,” she noted.
Investors were also concerned about oil demand in the world’s largest economy. U.S. crude oil inventories decreased last week, primarily due to a decline in imports and a sharp increase in exports, according to the Energy Information Administration’s data.
However, distillate stockpiles jumped by 4 million barrels, compared with market expectations of a 1.2 million barrel gain, according to ING commodities data.
“This was the highest level seen since late January as exports continue to edge lower. This should help to ease some pressure on a tight diesel market, heading into the peak demand season for agricultural harvests and winter heating,” ING analysts said.
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