Global oil prices remain stable amid weak demand signals

SINGAPORE: Oil prices held steady on Friday as traders weighed signs of softer fuel demand in the United States against hopes that lower interest rates could lift economic activity and energy consumption in the months ahead.

Brent crude futures slipped just 1 cent to $67.43 a barrel by 0100 GMT, while US West Texas Intermediate (WTI) futures edged down 4 cents to $63.53. Despite the muted session, both benchmarks were still set to end the week with gains, marking their second straight weekly rise.

Demand concerns linger despite rate cut

The US Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, its first reduction this year, and hinted that more cuts could follow as the central bank looks to support a cooling jobs market. Lower borrowing costs usually spur growth and, in turn, fuel consumption, often pushing oil prices higher.

However, fresh data showing an unexpected build-up in US distillate stockpiles has clouded that outlook. Inventories rose by 4 million barrels last week, far exceeding market expectations of a 1 million barrel increase. The jump suggested slowing demand in the world’s biggest oil-consuming nation and put a lid on price gains.

“Gains in the USD and US long-end yields further undermined support for crude oil,” said Tony Sycamore, analyst at IG.

Dollar strength and weak data add pressure

The US dollar index climbed 0.43 percent to 97.37, strengthening to 0.793 against the Swiss franc and 147.95 against the Japanese yen. A stronger dollar typically makes commodities priced in the currency more expensive for buyers holding other currencies, dampening demand.

Economic data also painted a gloomy picture. Jobless claims released this week showed the US labour market has softened, with fewer openings and fewer workers seeking jobs. Meanwhile, single-family home construction tumbled to its lowest level in two and a half years in August as unsold housing stock piled up.

Russian supply fears ease

Supply concerns also eased slightly after Russia, the world’s second-largest oil producer in 2024 after the US, announced new steps to shield its budget from price swings and Western sanctions. The move from Moscow’s finance ministry helped calm worries about any sudden disruption in Russian exports.

“President Trump’s comment that he preferred low prices over sanctions on Russia also eased concerns over supply disruptions,” said Daniel Hynes, analyst at ANZ, in a note on Friday.

Read next: Global gold prices pause below record peak