Oil prices held steady on Thursday after the U.S. Federal Reserve delivered a widely anticipated interest rate cut and signaled more reductions could follow this year, raising hopes of stronger demand from cheaper borrowing costs.
Brent crude futures slipped 8 cents, or 0.12%, to $67.87 a barrel at 0042 GMT, while U.S. West Texas Intermediate futures eased 10 cents, or 0.16%, to $63.95.
On Wednesday, the Fed trimmed its policy rate by a quarter percentage point and indicated further cuts are likely through year-end as officials moved to counter signs of labor market weakness.
Ahead of the announcement, Brent crude futures fell 33 cents, or 0.5 percent, to $68.14 a barrel at 0810 GMT, and U.S. West Texas Intermediate crude futures fell 32 cents, or 0.5 percent, to $64.20 a barrel.
The benchmarks were sold by over 1 percent in the previous trading period because Russia’s supplies might be hampered due to the Ukrainian attacks.
PVM Oil Associates analyst John Evans stated, “If the drone damage (to Russian energy infrastructure) proves to be short-lived, the recent range of say, $5 per barrel, will resume.” He added that “Given the impasse in sanctions and the arrival of more OPEC barrels, the only hope for an oil rally has been through the lack of distillate stock as we approach winter.”
On Tuesday, it was reported that three industry sources indicated that the monopoly state-run oil pipeline Transneft had concerned producers that they might be forced to reduce output, Ukraine suffered drone attacks on key ports and refineries in its export market.
On the supply side, market sources who quoted American Petroleum Institute data reported that U.S. crude and gasoline stocks decreased last week, while distillate stocks increased.
The market is also looking forward to the U.S. Energy Information Administration- a poll of nine analysts conducted by Reuters showed estimates that indicated that inventories of crude oil have decreased, even though distillate and gasoline stocks have increased.
