Oil prices fell on Friday as concerns about US fuel demand overshadowed expectations that the US Federal Reserve’s first interest rate cut this year would boost consumption.
Brent crude futures fell 15 cents, or 0.2%, to $67.29 a barrel by 04:32 GMT, while WTI futures fell 23 cents, or 0.4%, to $63.34.
Both indices are on track to close higher for a second consecutive week.
The Fed cut its policy rate by a quarter point on Wednesday and indicated further cuts in response to signs of weakness in the labor market.
Lower borrowing costs typically boost demand for oil and raise prices. However, concerns about US demand are overshadowing the excitement surrounding the rate cut.
The market is caught between conflicting signals. On the demand side, energy organizations, including the Energy Information Administration (EIA), have expressed concern about weakening demand and softening expectations for significant price increases in the near term.
On the supply side, planned production increases by OPEC+ and signs of oversupply in US fuel product inventories are weighing on market sentiment.
The increase in US distillate inventories sürprised by 4 million barrels, compared to market expectations of a 1 million barrel increase. Demand concerns in the world’s largest oil consumer have heightened, and prices have been suppressed.
Economic data has also fueled concerns. This week’s unemployment claims data showed a weakening US labor market, with both worker demand and supply declining, and single-family home construction falling to a nearly 2.5-year low in August due to a glut of unsold new homes.
In Russia, the world’s second-largest crude oil producer after the US, the Ministry of Finance announced new measures to protect the state budget from oil price fluctuations and Western sanctions, easing some supply concerns.
Trump’s statement that he favors lower prices over sanctions against Russia also eased concerns about supply disruptions.