Oil News: Outlook Clouded by Weak U.S. Fuel Demand and Distillate Stockpile Jump

Oil Stuck Between Key Technical Levels With No Clear Breakout

Light crude oil futures were under pressure on Thursday, slipping toward the lower end of a tight trading range as traders digested the Federal Reserve’s latest interest rate cut. Price action was contained between resistance at the 50-day moving average of $63.81 and support at the 200-day moving average at $62.99, with no decisive breakout in sight.

At 09:54 GMT, Light crude oil futures are trading $63.29, down $0.41 or -0.64%.

A sustained move above $63.81 could attract fresh buying interest, but bulls face stiff resistance at a cluster of upside pivots: $64.21 (long-term), $65.06 (short-term), and $65.83 (intermediate-term). The key level to watch remains the main top at $66.03, a potential trigger point for bullish acceleration. On the downside, a break below $62.99 opens the door for a sharper drop toward $61.34 and $61.10, with $60.77 as major support.

Federal Reserve Cuts Rates, but Demand Outlook Remains Cloudy

The Fed’s quarter-point rate cut on Wednesday was widely anticipated, marking the start of what Chair Jerome Powell signaled would be a gradual easing cycle in response to labor market softness. While looser monetary policy typically supports oil demand through cheaper borrowing, traders remain cautious.

Kuwait’s oil minister Tariq Al-Roumi expressed optimism, saying the cut should lift demand—particularly from Asia. But market participants remain divided. Jorge Montepeque of Onyx Capital Group said the Fed acted out of concern for slowing U.S. growth, not necessarily to spur demand. Powell’s comments on rising downside employment risks, paired with his caution on inflation, added to the mixed sentiment.

Inventory Data Adds Pressure as Distillate Build Signals Weak Fuel Demand

Fresh data from the U.S. Energy Information Administration added to bearish sentiment. While crude inventories fell sharply last week due to record-low net imports and near two-year high exports, a surprise 4 million barrel build in distillates—compared to expectations of a 1 million barrel rise—raised red flags about end-user demand.

Softness in U.S. fuel consumption continues to cap upside momentum in oil, despite bullish signals from inventory draws and the broader macro backdrop of rate cuts. Traders remain focused on short-term technical levels and mixed demand cues from both domestic and international markets.

Outlook: Cautiously Bearish Below 50-Day Moving Average

Until WTI crude can post a sustained move above the 50-day moving average, the market remains vulnerable to downside breaks. Bearish risks increase if support at the 200-day moving average fails, with potential acceleration toward $60.77.

Lingering concerns over weak U.S. fuel demand and uncertainty around Fed policy effectiveness are keeping traders defensive. The near-term outlook leans bearish, with key resistance levels capping bullish momentum.

More Information in our Economic Calendar.