London: Oil prices on Thursday reflected the tension between optimism over U.S. monetary policy and anxiety surrounding the state of the world’s largest economy. Traders cautiously adjusted positions, balancing the Federal Reserve’s rate cut against signals of slowing demand.
Brent crude inched up by 10 cents to $68.05 per barrel, while U.S. West Texas Intermediate (WTI) crude edged 4 cents higher to $64.09 per barrel. The modest gains highlighted the market’s indecision, with investors uncertain whether the Fed’s move would truly stimulate consumption or simply confirm growing economic fragility.
The Federal Reserve on Wednesday trimmed its policy rate by 25 basis points, a move aimed at shoring up economic momentum. The decision, however, was viewed with mixed emotions by traders and analysts alike. While lower borrowing costs often support energy demand, the cut also underscored deepening concerns about the U.S. job market and sluggish growth.
Kuwait’s Oil Minister, Tariq Al-Roumi, struck a more upbeat tone, predicting that cheaper credit and stronger demand from Asia could soon lift global consumption. He pointed to China and India as potential engines for recovery, suggesting that oil demand in the region may accelerate in the coming quarters if monetary conditions ease worldwide.
Still, not all voices shared his confidence. Jorge Montepeque, Managing Director at Onyx Capital Group, cautioned that the Fed’s move might not deliver the demand boost markets expect. Instead, he argued, the cut reflects a central bank responding to deteriorating fundamentals rather than anticipating growth. “The timing says it all the Fed is reacting, not leading,” he remarked.
U.S. supply data added further complexity to the outlook. Government reports showed that crude oil stockpiles fell significantly, largely due to a steep drop in net imports and the highest level of exports seen in nearly two years. At the same time, distillate inventories surged by 4 million barrels, far exceeding expectations of just 1 million. Analysts interpreted the jump in heating oil and diesel supplies as a warning sign that domestic consumption may be weakening.
For now, oil markets remain locked in a delicate balancing act. The Fed’s decision has offered a flicker of optimism for energy demand, but swelling inventories and fragile U.S. growth continue to cast a long shadow. Traders appear poised for volatility in the weeks ahead, with global demand signals and further Fed moves likely to dictate the direction of oil prices.