Published by Global Banking & Finance Review®
Posted on September 19, 2025
3 min readLast updated: January 21, 2026
Add as preferred source on GoogleOil prices fell due to robust supply outweighing the impact of the Fed's rate cut. Despite the cut, demand remains weak amid economic concerns.
By Erwin Seba
HOUSTON (Reuters) -Oil prices dropped on Friday as worries about large supplies and declining demand outweighed expectations that the year's first interest-rate cut by the U.S. Federal Reserve would trigger more consumption.
Brent crude futures were down 71 cents, or 1.05%, at $66.73 a barrel by 12:53 p.m. CDT (1753 GMT), while U.S. West Texas Intermediate futures also fell by 71 cents, or 1.12%, to $62.86.
Both benchmarks were still on track for a second consecutive weekly gain.
"Oil supplies continue to remain robust and OPEC is reducing its oil production cuts," said Andrew Lipow, president of Lipow Oil Associates. "We haven't seen an impact on Russian crude oil exports" from sanctions.
The Fed cut its policy rate by a quarter of a percentage point on Wednesday and indicated that more cuts would follow as it responded to signs of weakness in the U.S. jobs market.
Lower borrowing costs typically boost demand for oil and push prices higher.
John Kilduff, partner with Again Capital, said future Fed rate cuts of a quarter of a percentage point would likely not boost oil markets because it would further weaken the dollar, making oil more expensive to buy.
"The Fed will have to be more aggressive than they have been," Kilduff said. "We need a 50 (basis-point increase) to boost demand. The Fed's action is not translating to growth for the crude market due to underlying market fundamentals."
On the demand side, all energy agencies, including the U.S. Energy Information Administration, have signaled concern about weakening demand, tempering expectations of significant near-term price upside, said Priyanka Sachdeva, an analyst at Phillip Nova.
Lipow also saw effects on the demand side.
"The refinery turnaround season will further reduce demand," he said.
Refineries shut production units in the spring and fall for overhauls, called turnarounds.
A higher-than-expected increase of 4 million barrels to U.S. distillate stockpiles raised worries over demand in the world's top oil consumer and pressured prices. [EIA/S]
The latest economic data added to concerns, with the U.S. jobs market softening while single-family homebuilding plunged to a multi-year low in August, discouraged by a glut of unsold new houses.
One factor holding back oil prices is an uneven economic recovery, particularly in the U.S., said PVM Oil Associates analyst Tamas Varga.
"The corporate sector is benefiting from ongoing deregulation, whereas consumers are beginning to feel the strain of import tariffs, with both the labor and housing markets showing signs of weakness," he said.
(Reporting by Erwin Seba in Houston, Stephanie Kelly in London; Additional reporting by Sudarshan Varadhan; Editing by Jan Harvey, David Gregorio and Leslie Adler)
Oil prices dropped due to worries about large supplies and declining demand, which outweighed expectations of the Federal Reserve's first interest-rate cut of the year.
The Fed cut its policy rate by a quarter of a percentage point, typically lowering borrowing costs, which usually boosts demand for oil. However, analysts believe this cut may not significantly impact oil markets.
All energy agencies, including the U.S. Energy Information Administration, have expressed concerns about weakening demand, particularly highlighted by a higher-than-expected increase in U.S. distillate stockpiles.
The refinery turnaround season involves refineries shutting production units for overhauls, which typically occurs in the spring and fall, further reducing demand for oil.
An uneven economic recovery, particularly in the U.S., is affecting the oil market, with signs of weakness in both the labor and housing markets contributing to lower demand.
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