Oil prices dipped slightly in Asian trade on Friday as traders took profits, but crude is on track for a weekly gain thanks to a hefty U.S. interest rate cut that eased concerns about slowing demand.
Crude prices made a strong recovery from recent lows, with much of the rebound happening this week as the dollar weakened following the Federal Reserve’s rate cut.
Increased tensions in the Middle East also supported crude prices, with conflicts in Gaza and alleged actions by Israel against Hezbollah members sparking fears of retaliation.
However, worries about slowing demand, particularly in China, have capped the gains in crude. U.S. fuel demand also seemed to be cooling as the summer season came to an end.
Brent crude futures for November delivery fell 0.4% to $74.60 a barrel, while WTI futures dropped 0.4% to $70.86 a barrel.
Oil Gains Boosted by Rate Cut
Brent crude was up 3.4% for the week, while WTI futures rose 4.6%. The rate cut by the Federal Reserve at the high end of expectations and signals of further easing helped lift crude prices.
Lower interest rates are seen as positive for economic activity, which should support crude demand in the future.
China Demand Worries Persist
Concerns about demand from China continue to weigh on crude markets, as economic indicators from the country show little improvement. The People’s Bank of China kept rates unchanged, despite calls for more stimulus.
Data from September revealed a slowdown in Chinese refinery output and weak oil imports, contributing to the pressure on oil prices.
Overall, the outlook for crude remains mixed, with geopolitical tensions and demand uncertainties shaping the market’s trajectory.