SINGAPORE, Sept 20 (Askume) – Oil prices fell on Friday and are expected to rise for a second straight week on a sharp U.S. interest rate cut and a drawdown in global inventories.
Brent crude futures fell 26 cents to $73.62 a barrel by 0527 GMT on Friday, up 4.3% for the week. US WTI crude oil futures fell 15 cents, or 0.2%, to $71.80 a barrel, extending a weekly gain of 4.8%.
The benchmark index has been recovering after falling to a three-year low on September 10 and has gained in five out of seven sessions since then.
Prices rose more than 1% on Thursday before falling slightly on Friday following the Federal Reserve’s decision to cut interest rates by half a percentage point on Wednesday . Rate cuts typically boost economic activity and energy demand, but some also see them as a sign of weakness in the U.S. labor market.
“Prices have been under pressure in recent months amid concerns about weak demand as tight monetary policy has restricted economic activity,” ANZ research analysts said in a note.
“Easy monetary policy has raised hopes that the US economy will avoid recession,” ANZ said.
Prices were also supported by a drop in US crude oil inventories, which fell to their lowest in a year last week.
A deficit of about 400,000 barrels per day (bpd) in the off-season oil market will support Brent crude prices in the range of $70 to $75 a barrel in the next quarter, but prices could fall until 2025, Citi analysts said on Thursday.
Rising tensions in the Middle East also supported crude oil prices. A walkie-talkie used by the Lebanese armed group Hezbollah exploded on Wednesday , a day after a pager was also blown up.
Security sources said Israeli intelligence agency Mossad was responsible, but Israeli officials have not commented on the attack.
China’s refining output fell for a fifth consecutive month in August, as weak demand due to China’s economic slowdown weighed on prices. China’s industrial production growth also fell to a five-month low last month, while retail sales and new home prices fell further.
