Oil prices weakened on Thursday (September 19), closing lower as traders remained concerned about the US economic outlook a day after the US Federal Reserve cut interest rates for the first time this year.

Brent crude futures fell 51 cents, or 0.8%, to $67.44. US West Texas Intermediate (WTI) crude fell 48 cents, or 0.8%, to $63.57. The Fed cut its benchmark interest rate by a quarter of a percentage point on Wednesday and indicated it would continue lowering borrowing costs for the rest of the year, responding to signs of weakness in the labor market.

Lower borrowing costs typically boost oil demand and push prices higher. "They're doing this now because it's clear the economy is slowing," said Jorge Montepeque, managing director at Onyx Capital Group. "The Federal Reserve is trying to restore growth."

The number of Americans filing for new unemployment benefits fell last week, reversing the previous week's surge. However, the labor market is weakening as both labor demand and supply decline.

US single-family homebuilding plunged to a nearly 2.5-year low in August amid a glut of unsold new homes, suggesting the housing market could remain a drag on the economy.

Persistent oversupply and weak fuel demand in the US, the world's largest oil consumer, also weighed on the market. US crude oil inventories fell sharply last week as net imports fell to a record low while exports surged to a nearly two-year high, data from the Energy Information Administration showed on Wednesday.

However, a 4 million-barrel increase in US distillate stocks, which defied market expectations for a 1 million-barrel increase, raised concerns about demand in the world's largest oil consumer and weighed on prices. (alg)

Source: Reuters