Summary
- Brent, WTI oscillated between gains and losses in European trading
- Fed chair highlighted concerns about job market
- Market concerned by rising supply, US demand concerns
(Reuters) – Oil prices edged higher on Thursday after the Federal Reserve cut interest rates as traders weighed the start of looser monetary policy against concerns about the U.S. economy.
Brent crude futures were up 34 cents, or 0.5%, at $68.29 a barrel by 1140 GMT. U.S. West Texas Intermediate futures added 37 cents, or 0.6%, to $64.42.
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The Fed cut its policy rate by a quarter of a percentage point on Wednesday and indicated it will steadily lower borrowing costs over the rest of the year, responding to signs of weakness in the jobs market.
Lower borrowing costs typically boost demand for oil and push prices higher.
Kuwait’s oil minister Tariq Al-Roumi said he anticipates an increase in oil demand following the recent U.S. interest rate cut, with a particular rise expected from Asian markets.
Some analysts were more sceptical about a positive impact on oil prices.
“They did this now because clearly the economy is slowing down,” said Jorge Montepeque, managing director at Onyx Capital Group. “The Federal Reserve is trying to restore growth.”
Federal Chair Jerome Powell said there were rising downside risks of employment compared to inflation, but inflation risks still needed to be assessed and managed.
Persistent oversupply and soft fuel demand in the U.S., the world’s biggest oil consumer, also weighed on the market.
U.S. crude oil stockpiles fell sharply last week as net imports dropped to a record low while exports jumped to a near two-year high, data from the Energy Information Administration showed on Wednesday.
A rise in distillate stockpiles (USOILD=ECI) by 4 million barrels, however, against market expectations of a gain of 1 million barrels raised worries about demand in the world’s top oil consumer and pressured prices.
Reporting by Anna Hirtenstein in London. Additional reporting by Katya Golubkova and Siyi Liu in Singapore; Editing by Tom Hogue and Bernadette Baum
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