Oil prices fell in Asian trade on Thursday after the U.S. Federal Reserve signaled it would slow the pace of interest rate cuts in 2025, which could slow economic growth and reduce fuel demand.

Brent crude futures were down 47 cents, or 0.6%, at $72.92 a barrel by 0515 GMT. U.S. West Texas Intermediate crude was down 39 cents, or 0.6%, at $70.19.

The declines reversed most of the benchmark contracts' gains from Wednesday, when prices settled higher as U.S. crude stockpiles fell and the U.S. Federal Reserve cut interest rates by 25 basis points as expected.

Prices weakened after U.S. central bankers issued projections calling for two quarter-point interest rate cuts in 2025 due to concerns about rising inflation. That was half a point lower than they had forecast in September.

Lower interest rates lower borrowing costs, which could boost economic growth and oil demand.

"The supply-demand balance through 2025 continues to look unfavourable and forecasts of demand growth of more than 1.0 million barrels per day in 2025 appear overbought in our view. Even if OPEC+ continues to hold back production, the market may still be in surplus," said Suvro Sarkar, head of DBS Bank's energy sector team.

Meanwhile, while demand in the first half of December improved year-on-year, volumes remained lower than some analysts had expected.

J.P. Morgan analysts said in a note that global oil demand growth for December so far was 700,000 barrels per day lower than expected, and for the year, global demand has grown by 200,000 barrels per day less than expected by November 2023.

Official data from the Energy Information Administration on Wednesday showed U.S. crude stockpiles fell by 934,000 barrels in the week to Dec. 13, compared with analysts' expectations in a Reuters poll for a draw of 1.6 million barrels. [EIA/S]

While the draw was less than expected, the market found support in the data as U.S. crude exports rose by 1.8 million barrels per day last week to 4.89 million barrels per day.

Source: Investing.com