Oil prices fell on Thursday morning after the US Federal Reserve signalled it would slow the pace of interest rate cuts in 2025, which could slow economic growth and reduce fuel demand.
Brent futures fell 47 cents to $72.92 a barrel and the US West Texas Intermediate (WTI) crude fell 39 cents, or 0.6 per cent, to $70.19.
On Wednesday, the US Federal Reserve cut interest rates by 25 basis points to the 4.25 per cent-4.50 per cent range.
The Federal Reserve, which hiked rates aggressively in 2022 and 2023 to combat a surge in inflation, began its easing cycle in September with a half-percentage-point cut in borrowing costs and followed up with a quarter-percentage-point cut last month.
The US central bank also signalled it will slow the pace at which borrowing costs fall further, given a relatively stable unemployment rate and little recent improvement in inflation.
There are projections that they will make just two quarter-percentage-point rate reductions by the end of 2025.
Lower rates decrease borrowing costs, which can boost economic growth and oil demand.
The decision led to the strengthening of the Dollar and limited gains on oil prices as a stronger greenback makes oil more expensive in other countries, which can reduce demand.
Prices may find support after the US Energy Information Administration (EIA) reported an inventory decline of 900,000 barrels for the week to December 13.
The number compares with an inventory draw of 4.7 million barrels estimated by the American Petroleum Institute (API) for the same week on Tuesday.
A week ago, the EIA estimated a crude oil inventory draw of a much more moderate 1.4 million barrels, while sizable builds in fuel stocks dampened the potential bullish effect of the crude inventory move.
For the week to December 13, the EIA estimated mixed changes in gasoline and middle distillate inventories.
Market analysts noted that the demand-supply balance going into 2025 continues to look unfavourable as some producers like Brazil, Argentina, and the US will increase their output.
They added that even if the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ continues to withhold production, the market may still be in surplus