NEW YORK: Oil prices declined on Friday as concerns over abundant supplies and weakening demand overshadowed the US Federal Reserve's first interest rate cut of the year.
Brent crude futures settled at $66.68 per barrel, down 76 cents or 1.1%, while US West Texas Intermediate (WTI) futures finished at $62.68, down 89 cents or 1.4%. Despite the drop, both benchmarks marked their second consecutive weekly gain.
Analysts attributed the decline to robust oil supplies and OPEC's scaling back of production cuts. Andrew Lipow, president of Lipow Oil Associates, noted that oil supplies remain strong and that OPEC is reducing production cuts.
Concerns over demand were also heightened by a 4 million-barrel rise in US distillate stockpiles, along with signs of a slowing US economy, including softening employment data and a sharp drop in single-family homebuilding.
The Fed cut its policy rate by a quarter percentage point on Wednesday, indicating more cuts could follow. However, some analysts, including John Kilduff of Again Capital, said modest reductions may not sufficiently boost oil demand. "The Fed's move is not translating into growth for the crude market due to underlying fundamentals", he noted.
Refinery maintenance season and seasonal turnarounds are expected to further temper demand, keeping prices under pressure in the near term. — Reuters
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