Oil prices were little changed on Thursday as lingering concerns over demand capped the potential benefits of a larger-than-expected Federal Reserve interest rate cut.
Brent crude futures for November rose 8 cents to $73.73 a barrel by 0015 GMT, while WTI crude futures for October declined 3 cents to $70.88 a barrel.
The US central bank cut interest rates by half a percentage point on Wednesday. Interest rate cuts typically boost economic activity and energy demand, but the market perceived it as a sign of a weaker labor market that could slow the economy.
That view appeared to outweigh the boost that interest rate cuts usually bring to economic activity.
“While the 50 basis point cut hints at harsh economic headwinds ahead, bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates,” ANZ analysts said in a note.
Weak demand from China’s slowing economy also continued to weigh.
Refinery output in China slowed for a fifth month in August, Statistics Bureau data showed over the weekend. China’s industrial output growth also slowed to a five-month low last month, and retail sales and new home prices weakened further.
Markets were also keeping an eye on events in the Middle East after walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following similar explosions of pagers the previous day.
Security sources said Israeli spy agency Mossad was responsible, but Israeli officials did not comment on the attacks.
Citi analysts say they expect a counter-seasonal oil market deficit of around 0.4 million bpd to support Brent crude prices in the $70 to $75 a barrel range during the next quarter, but that would be temporary.
