Oil Price Retreats: WTI at $62.81, Brent $66.65 as Fed Cut Fails to Spark Demand

Oil Prices Edge Lower as WTI and Brent Face Demand Headwinds Despite Fed Cut

West Texas Intermediate (CL=F) settled at $62.81 per barrel, down 1.20%, while Brent crude (BZ=F) closed at $66.65, off 1.17%. Both contracts had flirted with weekly gains earlier, but persistent worries over refinery demand, product oversupply, and sluggish macro data overshadowed the positive impulse from the Federal Reserve’s 25-basis-point rate cut. The consolidation seen throughout September, with Brent locked in a $65.5–$69 range, underscores how supply risks are being offset by visible demand weakness.

Federal Reserve’s 25bps Cut Fails to Spark Oil Rally

The Fed’s first rate reduction since December was intended to ease borrowing costs and stimulate activity, but crude markets reacted with restraint. Distillate stockpiles in the U.S. surged by 4 million barrels, quadruple the expected build, suggesting heavy industrial and freight weakness. U.S. single-family homebuilding fell to a 2.5-year low, and even with looser monetary policy, traders doubt consumption will recover fast enough to absorb the growing supply overhang.

Ukraine-Russia Escalation Injects Supply Risk Premium

Ukraine’s drone strikes on Russia’s Primorsk export terminal and Kirishi refinery disrupted as much as 300,000 barrels per day of refining capacity. Russia’s pipeline operator Transneft warned additional curtailments may be needed if facilities remain damaged. With Russia still the second-largest global crude producer, supply disruptions remain a potent bullish counterweight, keeping volatility elevated and Brent’s premium to WTI intact.

OPEC+ Shifts Production Plans and Raises Market Uncertainty

OPEC+ confirmed plans to boost output by 137,000 barrels per day starting in October, rolling back part of the voluntary cuts agreed earlier this year. While small in scale compared to the 1.65 million barrels per day reduction initially pledged, the timing raised concerns that the bloc may prioritize market share over price stability. Saudi Arabia and the UAE continue to steer production policy, but the decision highlighted cracks in the strategy just as demand remains fragile.

India Expands Russian Crude Imports Despite U.S. Tariff Tensions

Indian refiners increased Russian crude imports by 150,000–300,000 barrels per day in September, a 10–20% monthly jump, even as Washington doubled tariffs on Indian exports. With Urals trading at a $3–$4 discount to Brent, Indian refiners continue to exploit arbitrage opportunities, signaling that U.S. pressure is being sidestepped in favor of cost savings. These flows add complexity to global supply-demand balances and challenge Washington’s trade leverage.

European Sanctions and LNG Shift Add Structural Supply Risks

The European Union advanced plans to ban Russian LNG imports earlier than the 2028 deadline, a move that could further reshape trade flows. Alongside fresh sanctions targeting Iran, Iraq, and Venezuela, the tightening of supply routes creates the possibility of sharp price squeezes should demand rebound unexpectedly. At present, however, these risks remain overshadowed by sluggish consumption trends.

Refinery Maintenance Pressures Product Markets

Seasonal refinery shutdowns in the U.S. and Europe are cutting crude runs, contributing to swelling stockpiles. Gasoline futures slipped to $1.973 per gallon, down 1.92%, as distillate inventories piled higher. Analysts warn this seasonal weakness could persist into October, prolonging softness in crude demand just as refiners lower capacity utilization rates.

Technical Setup for WTI and Brent Shows Resistance Levels Holding

WTI faces resistance near $63–$64, with short-term support anchored at $62.50 and a secondary floor at $61.80. Brent remains capped below $67.50, with critical support at $66.00 and a deeper line at $65.50. Momentum indicators have flattened, signaling exhaustion after repeated failed attempts to break higher. Without a decisive supply shock, crude prices are likely to remain trapped in sideways-to-lower patterns.

Verdict: Hold-to-Sell Bias Until Brent Clears $69

At $62.81 for WTI and $66.65 for Brent, the market is stuck between oversupply realities and geopolitical risk premiums. Inventory builds, OPEC+ output shifts, and refinery shutdowns argue for caution, while Ukraine-Russia conflict and sanctions enforcement maintain volatility. The data leans bearish for now, with a Hold-to-Sell stance favored unless Brent can decisively clear the $68–$69 resistance zone to restore upward momentum.

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