Oil prices fell in Asian trading on Thursday after a deeper-than-expected interest rate cut by the Federal Reserve raised concerns about the U.S. economy.
Brent crude futures for November were down 34 cents, or 0.46%, at $73.31 a barrel by 0015 GMT, while WTI crude futures for October were down 42 cents, or 0.59%, at $70.49 a barrel.
The U.S. central bank cut interest rates by half a percentage point on Wednesday, suggesting the Fed saw a slowdown in the jobs market. That view appeared to outweigh the boost that interest rate cuts usually provide to economic activity.
“While the 50 basis point cut suggests economic pain, bearish investors were not satisfied after the Fed raised the medium-term rate outlook,” ANZ analysts said in a note.
Weak demand linked to the slowdown in the Chinese economy also continued to weigh.
“Lingering concerns about Chinese demand overshadowed the Fed’s decision,” said Tony Sycamore, market analyst at IG.
Refinery output in China slowed for the 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 continued to weaken.
However, Citi analysts said Chinese oil demand could rebound by 300,000 barrels per day year-on-year in the fourth quarter, helped by improved output from independent refineries and the start-up of new refiner Shandong Yulong Petrochemical, which would provide some support to global demand.
Markets were watching developments in the Middle East after walkie-talkies used by the Lebanese armed group Hezbollah exploded on Wednesday, following similar pager explosions the day before.
Israeli authorities have not commented on the attacks, but security sources said Israel’s spy agency Mossad was responsible, fueling fears of an escalation in Israel’s 11-month war in Gaza.
