Oil prices slip as fed rate cut sparks economic concerns

September 18, 2025 (MLN): Oil prices fell for the second straight session on Thursday, as the Federal Reserve’s expected interest rate cut shifted market attention toward worries over the U.S. economy and rising supply levels.

Brent crude futures went up by $0.06, or 0.09%, to $67.89 per barrel.

West Texas Intermediate (WTI) crude futures decreased by $0.12, or 0.19%, to $63.93 per barrel by [2:20 am] PST.

The Federal Reserve reduced its policy rate by 25 basis points on Wednesday and signaled that it plans to gradually cut borrowing costs through the rest of the year, in response to signs of weakness in the labor market.

While lower borrowing costs generally support oil demand and lift prices, analysts noted that the Fed’s move and the prospect of two additional cuts this year were already factored in.

“The key market focus wasn’t just the rate cut, but Powell’s gloomy tone,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“He highlighted a deteriorating jobs market and stubborn inflation, making the cut appear more like a safeguard than a growth driver.”

Claudio Galimberti, chief economist and global director of market analysis at Rystad Energy, wrote in a client note that the Fed’s stance suggested policymakers view unemployment as a bigger risk to the economy than inflation.

Oil markets also came under pressure from persistent oversupply and subdued fuel demand in the United States, the world’s largest consumer.

According to data released Wednesday by the Energy Information Administration, U.S. crude inventories dropped sharply last week as net imports hit a record low and exports rose to their highest in nearly two years.

However, distillate stockpiles climbed by 4m barrels, far above expectations of a 1m barrel increase, fueling concerns over demand and weighing on prices.

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