Oil extended slide as supply glut and demand concerns eclipse FED rate cut

Oil prices extended their decline on Friday, capping a three-day losing streak, as persistent worries over abundant supply and faltering demand overshadowed optimism that the US Federal Reserve’s first interest-rate cut of the year might stimulate consumption.

Brent settled at $66.68 a barrel, down 76 cents or 1.1%. 

WTI finished at $62.68, down 89 cents or 1.4%. Both benchmarks posted weekly losses.

Analysts noted that supplies remain robust while OPEC’s production cuts are showing signs of easing, adding pressure to already fragile sentiment.

The FED on Wednesday lowered its policy rate by 0.25% and signalled further cuts ahead in response to softness in the US labour market. While cheaper borrowing costs typically lift oil demand, market watchers argued that the modest size of the move would not deliver meaningful support, especially as it could weaken the dollar and make crude more expensive for local investors.

Meanwhile, a cordial exchange between the US and the Chinese top officials helped ease market nerves over the prospect of Washington imposing secondary sanctions on Russian crude shipments via indirect tariffs. The dialogue also tempered expectations of further US tariff measures against China, just a week after the administration had urged allies to levy duties of up to 100% on Chinese and Indian imports. Traders said the diplomatic tone reduced immediate fears of trade tensions escalating in ways that could disrupt oil flows.

Written by: Farid Muzaffar