Oil prices dropped on Thursday following a larger-than-anticipated interest rate cut by the Federal Reserve, raising concerns about the U.S. economy.
Brent crude futures for November fell by 34 cents, or 0.46 percent, settling at $73.31 a barrel by 00:15 GMT. Meanwhile, October WTI crude futures decreased by 42 cents, or 0.59 percent, to $70.49 a barrel.
The U.S. central bank’s decision to reduce interest rates by half a percentage point on Wednesday indicated their perception of a slowing job market. This assessment appeared to overshadow the typical economic boost associated with such cuts.
Reuters highlighted that the 50 basis point reduction indicates considerable economic challenges ahead, but bearish investors felt dissatisfied after the Fed revised its medium-term rate outlook upward, according to insights from ANZ analysts.
Concerns about weak demand stemming from China’s sluggish economy further contributed to the decline.
Tony Sycamore, an analyst at IG Markets, remarked that ongoing concerns about demand from China were overshadowing the Fed’s announcement.
Data from China’s statistics bureau indicated that refinery output slowed for a fifth consecutive month in August. Additionally, China’s industrial output growth fell to a five-month low last month, with further declines in retail sales and new home prices.
However, analysts at Citi suggested that Chinese oil demand could rebound by 300,000 barrels per day year-on-year in the fourth quarter, thanks to improved operations at independent refineries and the launch of the new Shandong Yulong Petrochemical refinery, which may provide some support to global demand.
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