International oil prices remained largely stable in early trading Thursday. Brent crude futures fell slightly by 0.12% to $67.87 per barrel, while West Texas Intermediate (WTI) crude oil fell by 0.16% to $63.95. Although the Federal Reserve's interest rate cuts boosted demand expectations, market sentiment remained cautious due to inventory data.

The Federal Reserve cut its benchmark interest rate by 25 basis points on Wednesday and signaled continued easing is likely throughout the year in response to signs of a slowing labor market. Generally speaking, lower borrowing costs help stimulate economic activity and energy consumption.

“For Brent crude, this rate cut and the two expected rate cuts this year will be positive factors, offsetting some of the supply pressure from the gradual lifting of OPEC+ production cuts,” said Claudio Galimberti, chief economist at Rystad Energy.

Data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories fell significantly last week due to falling imports and exports near a two-year high. However, distillate inventories unexpectedly increased by 4 million barrels, far exceeding market expectations of 1 million barrels, raising concerns about weak terminal consumption.

According to market research, global oil demand averaged 104.4 million barrels per day (bpd) by September 17, an increase of 520,000 bpd year-on-year. Year-to-date demand growth was 800,000 bpd, slightly lower than the previous forecast of 830,000 bpd.

“While flight volumes in the United States and major Asian countries have slowed after peak summer travel, aviation activity is still growing in Europe, the Middle East and Latin America,” JP Morgan said in a note to clients.

From the daily chart, the price of US crude oil has received temporary support around $63.50. The key support level below in the short term is $63.00. If it falls below this level, it may further fall to the $62.20 area.

Upward resistance is concentrated in the $64.80-$65.20 range, with a potential challenge of $66.00 upon a breakout. The overall pattern suggests that oil prices are range-bound. Demand expectations driven by the Fed's rate cuts may provide a rebound in oil prices, but inventory pressures continue to limit upward momentum.

Editor's opinion:

Overall, the Federal Reserve's interest rate cuts have provided some support for oil prices, but the unexpected increase in US refined product inventories suggests volatility in downstream demand. While global demand continues to grow moderately, regional differences are evident. Going forward, oil prices will continue to find a balance between expectations boosted by policy easing and inventory and supply pressures.