Oil prices closed lower amid concerns about high supply volumes.
The Fed cut its interest rate and indicated that further cuts would follow, in response to signs of weakness in the U.S. labor market.
By Erwin Seba
HOUSTON (Reuters) Oil prices fell on Friday as concerns about large supply volumes and declining demand outweighed expectations that the first interest rate cut of the year by the U.S. Federal Reserve would trigger more consumption.
Brent crude oil futures closed at $66,68 a barrel, down 1,1%. US West Texas Intermediate (WTI) crude oil futures closed at $62,68, down 1,4%.
Both benchmark contracts, however, rose for the second consecutive week.
"Oil supply remains robust and OPEC is easing its oil production cuts," said Andrew Lipow, president of Lipow Oil Associates. "We haven't seen any impact on Russian oil exports" due to the sanctions.
The Fed cut its interest rate by a quarter of a percentage point on Wednesday and indicated that more cuts would follow, in response to signs of weakness in the U.S. labor market.
Lower borrowing costs typically increase demand for oil and drive up prices.
John Kilduff, a partner at Again Capital, said that future quarter-percentage-point cuts in Fed rates would likely not boost oil markets because they would further weaken the dollar, making oil purchases more expensive.
On the demand side, all energy agencies, including the U.S. Energy Information Administration, have signaled concern about weakening demand, dampening expectations of significant price increases in the short term, said Priyanka Sachdeva, an analyst at Phillip Nova.
(Reporting by Erwin Seba in Houston, Stephanie Kelly in London; additional reporting by Sudarshan Varadhan)
