Oil prices fall after Fed tapering sparks little cheer; US inventory data mixed by Investing.com

Investing.com– Oil prices fell in Asian trade on Thursday after a mixed reading on U.S. oil stocks, while an excessive interest rate cut by the Federal Reserve raised some concerns about a slowing economy.

Crude oil prices have rebounded sharply from near three-year lows in the past week. But that rebound now appeared to be faltering amid lingering concerns about slowing demand, particularly in top importer China.

A string of weak economic readings from China for August hurt sentiment about the country.

The Fed’s rate cut also showed the central bank is concerned about a slowdown in the labor market, which could herald more economic headwinds in the coming months.

U.S. crude that expires in November was down 0.3 percent at $73.41 a barrel, while it was down 0.3 percent at $69.65 a barrel by 8:52 p.m. ET (00: 52 GMT).

Reducing the feed rate causes a mixed reaction

The central bank by 50 basis points on Wednesday – the upper limit of market expectations – and signaled the start of an easing cycle that will see rates fall further.

While lower rates typically bode well for economic activity, the Fed’s aggressive tapering has raised some concerns about a potential slowdown in economic growth.

While Fed Chairman Jerome Powell helped calm some of those concerns, he also said the Fed has no intention of returning to an era of ultra-low interest rates and that the central bank’s neutral rate would likely be much higher than that observed in the past.

His comments indicated that while interest rates will fall in the short term, the Fed is likely to keep rates higher in the medium to long term. The rose follows Powell’s comments, which pressured crude oil markets.

U.S. inventories fall, but product inventories build

Government data released on Wednesday showed a larger-than-expected withdrawal of 1.63 million barrels.

While the pull was much larger than expected for a 0.2mb pull, it was also accompanied by build-ins and stocks.

The rise in product inventories raised concerns that U.S. fuel demand was cooling as the busy summer travel season ended.