Oil Prices Decline as U.S Federal Reserve Cuts Rates
Oil prices edged lower on Thursday after the Federal Reserve (Fed) cut interest rates for the first time this year, even as US government data showed a draw in crude inventories.
Brent crude traded at $67.30 a barrel, down 0.37% from the previous close of $67.55. US benchmark West Texas Intermediate (WTI) decreased by 0.39% to $63.39 from $63.64 in the prior session.
Prices retreated after the Fed lowered its policy rate by 25 basis points on Wednesday, the first cut of 2025. Fed Chair Jerome Powell described the move as a “risk-management cut,” calling it an insurance step against further weakness in the labor market.
“The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market,” he said. Powell added that the slowing in the job market is mostly due to lower immigration and lower labor force participation.
Also touching on the tariff issue and its effect on inflation, Powell said changes to government policies continue to evolve and their effects on the economy remain uncertain.
Analysts say lower rates often support oil demand, but added that markets have largely priced in expectations for two more cuts this year.
US commercial crude oil inventories fell by 2.2% in the week ending Sept. 12, according to data from the Energy Information Administration (EIA) released late Wednesday. Stocks dropped by 9.3 million barrels to 415.4 million, defying market expectations of a 1.4 million-barrel increase.
Strategic petroleum reserves, which are excluded from commercial inventories, rose by 500,000 barrels to 405.7 million. Gasoline inventories also decreased by 2.3 million barrels to 217.6 million.
EIA data showed that US crude oil production declined by 13,000 barrels per day (bpd) to around 13.48 million bpd during the same week. Crude oil imports fell by 579,000 bpd to about 5.69 million bpd, while exports jumped by 2.5 million bpd to approximately 5.28 million bpd.
In its Short-Term Energy Outlook (STEO) released on Sept. 10, the EIA projected that US crude oil output would average 13.44 million bpd in 2025. NAICOM Urges Insurers to Embrace Data, Innovation for Growth
