Oil prices ease on US demand concerns

Oil prices eased on Wednesday after data showing an increase in US diesel stockpiles stoked worries about demand and the US Federal Reserve cut interest rates as expected.

Brent crude futures settled 52 cents, or 0.76 per cent, lower to US$68.22 a barrel while US West Texas Intermediate crude futures lost 47 cents, or 0.73 per cent, at US$64.05.

US crude inventories fell sharply last week with a jump in exports and a sharp decline in imports, the Energy Information Administration said on Wednesday. But the rise in distillate stockpiles stoked demand concerns and kept a lid on prices, analysts said.

“Looks like markets are responding on diesel, which is the soft underbelly of the entire complex,” said Phil Flynn, a senior analyst at Price Futures Group.

US Federal Reserve on Wednesday cut interest rates by a quarter of a percentage point as expected and indicated it will steadily lower borrowing costs for the rest of this year, as policymakers responded to concerns about weakness in the job market.

“This was not unexpected,” said Phil Flynn, a senior analyst at Price Futures Group. “Right now the market is playing both sides in the middle.” On the supply side, Kazakhstan resumed oil supplies through the Baku-Tbilisi-Ceyhan pipeline on Sep 13, state energy company Kazmunaygaz said on Wednesday.

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Supplies were suspended last month because of contamination issues. In Nigeria, President Bola Tinubu on Wednesday lifted a six-month emergency rule in Rivers, a state located in the hub for Nigeria’s crude exports.

Russian oil supply risks were also in focus after Ukraine’s attacks on Russia’s energy infrastructure intensified in recent weeks.

Russia’s oil pipeline monopoly Transneft warned producers they might have to cut output after Ukraine’s drone attacks on critical export ports and refineries, three industry sources told Reuters on Tuesday. REUTERS