In early Asian trading on Friday, Brent crude futures edged down 1 cent to $67.43, while WTI futures edged down 4 cents to $63.53. Both benchmarks are still on track for their second consecutive weekly gain, but the overall trend lacks direction.

The Federal Reserve announced a 25 basis point interest rate cut at its meeting on Wednesday and signaled further easing to address the weak job market. Typically, lower interest rates boost consumption and energy demand, thereby supporting oil prices.

However, an unexpected increase of 4 million barrels in U.S. distillate inventories (compared to expectations of a 1 million barrel increase) heightened demand concerns, offsetting the impact of the policy.

Meanwhile, the US dollar index rose 0.43% to 97.37, appreciated against the Japanese yen to 147.95, and strengthened against the Swiss franc to 0.793. The strengthening of the US dollar and the rise in US long-term Treasury yields have jointly suppressed the appeal of crude oil.

Economic data also showed signs of weakness. The latest U.S. initial jobless claims data indicated a weakening labor market, with both labor supply and demand declining. Meanwhile, single-family home construction fell to a near 2.5-year low, reflecting increasing pressure in the housing market.

On the supply side, the Ministry of Finance of Russia, the world's second-largest oil producer, announced new measures to stabilize its budget from oil price fluctuations and external sanctions, which somewhat eased market concerns about supply disruptions.

In addition, ANZ analyst Daniel Hynes said: "President Trump's statement shows that he prefers to maintain low oil prices rather than strengthen sanctions on Russia, which eases market concerns about supply disruptions in the short term."

"The strength of the US dollar and long-term US yields further weakened support for crude oil," said IG analyst Tony Sycamore.

Looking at the daily chart, Brent crude oil prices retreated after encountering resistance near $68. Short-term support is at $66.50, and a break below that could push prices down to $65.20. WTI, on the other hand, encountered resistance at $64 and is currently consolidating above $63.

If it breaks through $64.50, it is expected to further test the resistance of $66; however, if it falls below $62.80, it may open up the downward space to $61.50. Overall, the trend is weak and the volatile pattern continues.

Editor's opinion:

Oil prices are currently facing a "double game". On the one hand, the Federal Reserve's interest rate cuts and loose policies theoretically support crude oil demand; on the other hand, US inventory data and weak macroeconomic indicators continue to exert pressure.

The strengthening of the US dollar and rising Treasury yields have further suppressed the potential for a rebound in oil prices. In the short term, US crude oil may fluctuate between $62.80 and $64.50, with the direction of the fluctuation still depending on US economic data and demand improvements.