At 10:06 GMT, Light Crude Oil Futures are trading $62.72, down $0.54 or -0.85%.
Federal Reserve Rate Cut Offers Limited Support
The Federal Reserve cut its benchmark rate by 25 basis points on Wednesday, citing labor market softness. Normally, lower borrowing costs boost demand for oil, but the effect has been muted. Traders remain focused on weakening fuel consumption signals, keeping expectations for sustained upside contained. Despite the dip, U.S. crude is still set for a second straight weekly gain, showing how cautious positioning has shaped this week’s trade.
OPEC+ Supply Plans and U.S. Inventories Pressure Market
On the supply front, OPEC+ continues to pursue production increases, adding to concerns of oversupply. In the U.S., government data showed distillate stockpiles rising by 4 million barrels, well above forecasts, raising doubts about domestic demand strength. Energy agencies, including the EIA, have flagged these demand concerns as a primary headwind, tempering bullish momentum from the Fed’s rate decision.
Weak U.S. Data Fuels Demand Worries
Economic indicators further weighed on sentiment. Single-family homebuilding slumped to a multi-year low in August, while unsold inventory piled up. Signs of consumer strain from tariffs and a cooling jobs market contrasted with ongoing corporate resilience, highlighting an uneven recovery. Analysts note that this disconnect is reinforcing the broader slowdown narrative, adding pressure on energy consumption forecasts.
In Russia, the finance ministry’s plan to shield the state budget from oil price swings and sanctions reduced fears of major supply disruptions. Comments from President Trump, preferring lower oil prices over tougher sanctions on Russia, also calmed supply risk premiums. These developments helped cap potential upside from geopolitical drivers that typically support crude.
Market Forecast: Bearish Bias with Key Levels in Focus
With demand signals softening and supply growth persisting, crude oil’s short-term outlook leans bearish. A sustained move under $62.75 would confirm this view, opening downside targets at $61.34, $61.10, and $60.77. Unless demand indicators improve or OPEC+ shifts its stance, sellers may continue to dominate near-term trade while rallies face resistance at the 200-day moving average near $63.00 and the 50-day at $63.78.
