December 18 (Reuters) – Crude oil futures drifted lower in Thursday’s European morning session following the U.S. Federal Reserve’s third and final rate cut of 2024, signaling a slower pace of future cuts due to persistent inflation concerns.
Crude Prices Dip After Fed Meeting
February 2025 ICE Brent futures were trading at $73.22 per barrel by 09:30 GMT, slightly down from Wednesday’s settlement of $73.39 per barrel, after hitting an intraday low of $73.71. At the same time, February 2025 NYMEX West Texas Intermediate (WTI) futures stood at $69.88 per barrel, down from $70.02 in the previous session, while the January 2025 WTI contract was at $70.57, approaching its expiry.
Fed Rate Cut and Slower Pace Ahead
The Federal Open Market Committee (FOMC) announced a 25 basis point cut to its federal funds rate, bringing it to a target range of 4.25% to 4.50%. While this rate cut had been largely anticipated, oil prices eased following the Fed’s forecast of two fewer rate cuts in 2025 than previously expected, due to ongoing inflationary pressures.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Fed Chair Jerome Powell remarked at the post-meeting press conference. His comments fueled a risk-off sentiment that spread across global financial markets, affecting commodities like oil.
U.S. Crude Inventory Update
U.S. commercial crude inventories decreased by nearly 1 million barrels last week, while distillate stocks fell by 3.2 million barrels, reflecting strong winter demand. However, gasoline stocks rose for the fifth consecutive week, driven by higher imports, which reached their highest levels since August. This helped offset the declines in crude and distillate inventories.
Despite the mixed data, oil prices remain influenced by broader economic expectations and the Federal Reserve’s cautious stance on future rate cuts.
