Oil prices saw a slight increase on Thursday following the Federal Reserve’s decision to cut interest rates, balancing the effects of easier monetary policy against ongoing worries about the U.S. economy. By 1140 GMT, Brent crude futures were up 34 cents, or 0.5%, reaching $68.29 a barrel, while U.S. West Texas Intermediate futures rose by 37 cents, or 0.6%, to $64.42. The Fed’s quarter-point rate cut, announced on Wednesday, aims to respond to signs of weakness in the jobs market and is expected to lower borrowing costs, which typically boosts oil demand.
Kuwait’s oil minister, Tariq Al-Roumi, expressed optimism about increased oil demand, particularly from Asian markets, in light of the rate cut. However, some analysts, like Jorge Montepeque from Onyx Capital Group, cautioned that the Fed’s action reflects a slowing economy and may not necessarily lead to higher oil prices. Federal Chair Jerome Powell acknowledged rising risks to employment but emphasized the need to manage inflation concerns.
Additionally, recent data from the Energy Information Administration indicated a sharp decline in U.S. crude oil stockpiles, driven by record-low net imports and rising exports. Despite this, a significant increase in distillate stockpiles, which rose by 4 million barrels against expectations of a smaller gain, raised concerns about demand in the U.S., the world’s largest oil consumer, putting downward pressure on prices.