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Oil prices fell today, but are on track to end the week higher for the second straight week, after a major U.S. interest rate cut and a decline in global inventories.
By 05:27 GMT, Brent crude futures were down 26 cents, or 0.4 percent, at $73.62 a barrel, but up 4.3 percent so far this week.
U.S. crude futures fell 15 cents, or 0.2 percent, to $71.80 a barrel, and gained 4.8 percent for the week.
The two benchmarks began to recover after falling to their lowest levels in nearly three years on September 10, and have recorded gains in five of the seven sessions since then.
The Federal Reserve cut interest rates by half a percentage point on Wednesday.
Interest rate cuts typically boost economic activity and demand for energy, but some saw the big cut as a sign of a tight U.S. labor market.
“Prices have been under pressure in the past few months amid concerns over weak demand as tighter monetary policy stifles economic activity,” analysts at ANZ Research said in a note.
“The easing of monetary policy has helped bolster expectations that the US economy will avoid a slowdown,” they added.
Prices also received support from a decline in US crude inventories, which fell to their lowest level in a year last week.
Analysts at Citigroup said yesterday that a seasonal oil market deficit of about 400,000 barrels per day will support Brent crude prices in the $70-$75 per barrel range over the next quarter, but they warned of lower prices in 2025.
Crude prices were also supported by rising tensions in the Middle East. Walkie-talkies used by the Lebanese militant group Hezbollah exploded on Wednesday, a day after similar pager explosions.
Security sources said the Israeli intelligence agency Mossad was responsible for the attacks. Israeli officials did not comment on the bombings.
Weak demand due to China’s slowing economy has put pressure on prices, with Chinese refinery throughput falling for a fifth straight month in August.
The country’s industrial output growth also slowed to a five-month low last month, and retail sales and new home prices fell further.
