Oil prices declined on Thursday amid signals that the US Federal Reserve (Fed) could pause its rate cuts in December, while data pointing to rising output in the US and expectations that the OPEC+ group will further boost production also weighed on market sentiment.
Brent crude was trading at $63.81 per barrel at 9.50 a.m. local time (0650 GMT), down 0.57% from the previous close of $64.18.
US benchmark West Texas Intermediate (WTI) also decreased by 0.43% to $59.93, compared to $60.19 in the prior session.
In line with market forecasts, Fed lowered its policy rate by 25 basis points to a range of 3.75%-4%. However, the bank signaled that this could be the last rate cut of the year, warning that the government shutdown risk may disrupt data flow.
Fed said economic activity continued to expand at a moderate pace, employment gains slowed, and inflation has risen since the beginning of the year.
During the Committee's discussions at this meeting Fed Chair Jerome Powell said: "A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a preset course."
"We haven't made a decision about December, and you know, we're going to be looking at the data that we have, how that affects the outlook and the balance of risks," Powell said.
These statements raised expectations that the Fed could pause rate cuts in December, exerting downward pressure on oil prices.
Experts noted that a low-interest-rate environment supports economic growth and oil demand, while tighter policy weakens demand and puts downward pressure on prices.
- US production rise adds to supply concerns
Data from the US Energy Information Agency (EIA) signaled higher production in the world's largest oil consumer, further supporting the decline in prices.
US commercial crude oil inventories fell by around 6.9 million barrels last week to 416 million barrels, while markets expected a draw of 900,000 barrels. Gasoline stocks also dropped by 5.9 million barrels to 210.7 million barrels during the same period.
Meanwhile, US crude oil output rose by 15,000 barrels per day to 13.644 million barrels, easing supply concerns and putting additional downward pressure on prices.
Markets also focused on the OPEC+ meeting scheduled for Nov. 2, where the alliance of OPEC and non-OPEC producers is expected to announce an additional output increase of 137,000 barrels per day for December.
The expectation further eased supply concerns and kept prices under pressure.
- US-China talks lend cap losses
On the other hand, positive signals from US-China talks bolstered market confidence, supporting global energy demand and limiting the decline in oil prices.
US President Donald Trump met with Chinese President Xi Jinping early on Thursday in Busan, South Korea, marking their first encounter since Trump's return to office.
At the start of the meeting, Xi said China and the US should be "friends and partners," emphasizing that this was both a lesson from history and a necessity of reality. "China's development does not conflict with the US goal of making America great again," he said.
Trump noted that the two countries had already reached consensus on many issues and hoped for further progress during the meeting. He also announced that tariffs on China imposed over fentanyl would be reduced to 10% and that he plans to visit China in April. Developments from the talks are being closely monitored by investors.
By Humeyra Ayaz
Anadolu Agency
energy@aa.com.tr