Oil drops amid concerns over US economy

Brent crude futures dropped 13 cents, or 0.19%, to $67.82 a barrel

Oil prices dropped for a second session on Thursday, after the U.S. central bank cut interest rates as expected and traders focused on concerns about the country’s economy and excess supplies.

Brent crude futures dropped 13 cents, or 0.19%, to $67.82 a barrel by 0417 GMT. U.S. West Texas Intermediate (WTI) futures declined 18 cents, or 0.28%, to $63.87.

The U.S. central bank cut its policy rate by a quarter of a percentage point on Wednesday and indicated it will steadily reduce borrowing costs over the rest of the year, responding to signs of weakness in the jobs market.

Lower borrowing costs typically boost demand for oil and push prices higher.

But the latest move and the hint of two more cuts this year was already priced in, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

What caught markets’ attention was not just the easing, but Powell’s downbeat message, she said, referring to bank Chair Jerome Powell.

He stressed weakening job markets and inflation that remains sticky, making the cut look more like risk-management than a demand booster, she added.

The indication of more rate cuts coming from the central bank signals that policymakers assess risk to the economy from unemployment to be higher than from inflation, said Claudio Galimberti, chief economist and global director of market analysis at Rystad Energy, in a client note.

Persistent oversupply and soft fuel demand in the U.S. also weighed on the market.

U.S. crude oil stockpiles dropped sharply last week as net imports declined to a record low while exports climbed to a near two-year high, data from the Energy Information Administration (EIA) showed on Wednesday.