Oil prices dropped on Thursday, with Brent crude falling 51 cents (0.7%) to close at $72.88 a barrel, while U.S. West Texas Intermediate (WTI) for January delivery declined 67 cents (1%) to $69.91 before expiration. The February WTI contract, which saw more activity, settled 64 cents lower at $69.38. The decline followed cautious remarks from the U.S. Federal Reserve, which reduced rates by 0.25% but indicated that inflation concerns would limit additional cuts in 2025. A strengthening U.S. dollar, reaching a two-year high, further pressured oil by making it more expensive for buyers using other currencies.
Market sentiment was also dampened by economic concerns. J.P. Morgan projected a surplus in the oil market for 2025, with supply exceeding demand by 1.2 million barrels per day. Additionally, China’s Sinopec predicted the country’s oil consumption would peak by 2027 due to weakening demand. Although U.S. crude inventories fell by 934,000 barrels last week, the decline was smaller than anticipated and provided limited price support. Brent has dropped more than 5% this year, heading for its second consecutive annual decline.