Crude Oil Prices Steady on Sep 19, as Demand Concerns Offset Boost from US Fed Rate Cut

Oil prices showed little movement on Friday after a recent dip, as optimism from the US Federal Reserve’s interest rate cut was overshadowed by worries about fuel demand. Rising distillate inventories, a firm dollar, and weak labor data weighed on crude despite support from easier monetary policy.

Market Snapshot

• Brent Crude: $67.43 per barrel (down $0.01)
• WTI Crude: $63.53 per barrel (down $0.04)

Both global benchmarks are still poised to end the week higher for the second consecutive week, despite short-term pressure from demand-side concerns.

Fed Rate Cut vs. Oil Demand Outlook

The Fed lowered its policy rate by 25 basis points on Wednesday, the first cut of the year, and signaled the possibility of further easing to support the slowing US economy. Lower interest rates usually stimulate borrowing and fuel demand, providing a tailwind for oil.

However, this positive driver was offset by bearish signals from the U.S. energy market. Distillate stockpiles rose by 4 million barrels last week far higher than the expected 1 million raising doubts over fuel consumption in the world’s largest oil consumer.

Dollar Strength Adds Pressure

A stronger US dollar also weighed on crude prices, making oil more expensive for holders of other currencies. The dollar index rose 0.43% to 97.37, climbing against both the Swiss franc and the Japanese yen.

Signs of Economic Softness

Fresh data highlighted weakness in the US labor market. Jobless claims rose, indicating both demand and supply for workers are easing. In addition, single family homebuilding fell to its lowest level in over two years amid rising inventory, further signaling a cooling economy.

Global Supply Context

Meanwhile, Russia the world’s second-largest oil producer in 2024 announced new measures to protect its budget from oil price swings and sanctions, slightly easing concerns about disruptions to global crude supply.

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Conclusion

Crude oil prices remain caught between opposing forces: the Fed’s rate cut offers potential support, but weak U.S. demand signals, swelling distillate stocks, and dollar strength are capping gains. With Brent and WTI still on track for a second weekly rise, markets will watch demand trends and global policy moves closely in the weeks ahead.

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