Oil Prices Slide as Fed Cut and Rising Inventories Pressure Market

Highlights:

• Price drop: Brent crude slipped below US$68/barrel and WTI fell under US$64 at the time of writing.
• Fed impact: Traders unwound positions after the US Fed’s quarter-point rate cut, already priced in by markets.
• Global pressures: Rising US inventories, OPEC+ supply growth, and geopolitical tensions weigh on oil outlook.

Brent and WTI Retreat

Crude oil prices continued their decline as traders digested the US Federal Reserve’s latest interest rate decision and a rise in American fuel inventories. At the time of writing, Brent crude was trading below US$68 per barrel, after slipping 0.8% in the previous session. West Texas Intermediate (WTI) also retreated, falling under US$64 per barrel.

Fed Decision Already Priced In

While lower interest rates generally support energy demand by stimulating economic activity, traders had largely priced in the Fed’s quarter-point cut before the announcement. As a result, many unwound hedges that had been built around expectations of a deeper move, contributing to renewed selling pressure in the oil market.

Trading Range and Market Dynamics

Wednesday’s (Thursday AEST) drop pulled oil back to the midpoint of the US$5 trading band that has held since early August. The commodity has faced heightened volatility, caught between near-term demand signals and structural supply concerns.

Geopolitical and Supply-Side Pressures

Prices are also being influenced by geopolitical risks and global supply dynamics. Recent Ukrainian attacks on Russian energy infrastructure have raised security concerns, while OPEC+ has accelerated the return of supply, fuelling predictions of a potential glut later this year. On the demand side, US President Donald Trump’s tariff policies continue to weigh on global growth expectations, adding to uncertainty in energy markets.

Outlook Ahead

Analysts suggest oil could remain range-bound in the short term, with supply gains and trade headwinds countering demand optimism from monetary easing. For now, traders are closely watching inventory data and geopolitical developments to gauge the next move in crude prices.

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