Oil prices slipped on Friday as concerns over weakening U.S. fuel demand overshadowed optimism from the Federal Reserve’s first rate cut of the year.
Brent crude futures dropped 17 cents, or 0.3%, to $67.27 a barrel by 06:56 GMT. U.S. West Texas Intermediate (WTI) futures also fell 19 cents, or 0.3%, to $63.38. Despite the decline, both benchmarks were still on track to post a second consecutive weekly gain.
The Fed lowered its benchmark interest rate by 25 basis points on Wednesday, signaling more cuts ahead in response to a softer labor market. Typically, lower borrowing costs support stronger oil demand. However, demand-side concerns continue to weigh on sentiment.
Priyanka Sachdeva, analyst at Phillip Nova, said the oil market is “caught between conflicting signals.” While rate cuts provide some support, agencies such as the Energy Information Administration (EIA) have flagged weakening demand, limiting near-term price growth.
On the supply side, OPEC+ production increases and oversupply in U.S. fuel inventories added further pressure. U.S. distillate stockpiles rose by 4 million barrels last week, far above expectations of a 1-million-barrel build, fueling worries about demand in the world’s top oil consumer.
Economic indicators also highlighted challenges. Jobless claims pointed to a cooling labor market, while U.S. single-family homebuilding dropped to its lowest level in 2.5 years due to excess housing supply.
Meanwhile, Russia, the world’s second-largest crude producer after the United States, introduced a new measure to shield its budget from oil price volatility and Western sanctions. This move helped ease some supply fears.
Additionally, President Donald Trump’s recent remarks favoring low oil prices over sanctions on Russia reassured markets that supply disruptions were less likely.
