Crude oil slides on demand concern – U.S. Fed cut fails to lift
Oil prices fell on Friday, with Brent crude at $67.30 per barrel and U.S. West Texas Intermediate at $63.29, as concerns over weakening demand overshadowed the U.S. Federal Reserve's first interest rate cut of 2025.
Despite the Fed's quarter-point rate reduction earlier in the week, analysts pointed to rising U.S. distillate inventories and slowing economic indicators as key reasons for the decline. Studies show oil price volatility tends to spill over into cryptocurrency markets, with research finding oil market shocks often trigger larger swings in digital asset prices.
The Fed signaled further easing ahead, with lower rates typically encouraging energy consumption. However, the Energy Information Administration reported a 4 million-barrel increase in U.S. distillate stockpiles, sparking renewed demand worries.
The Fed signaled further easing ahead, with lower rates typically encouraging energy consumption. However, the Energy Information Administration reported a 4 million-barrel increase in U.S. distillate stockpiles, sparking renewed demand worries.
Economic weakness also weighed on sentiment, with the U.S. labor market showing signs of softening and new homebuilding plunging to multi-year lows in August. A 2025 study found "significant positive volatility persistence" between crude oil prices and cryptocurrencies, meaning oil-market movements often increase short-term volatility in Bitcoin and other digital assets.
Priyanka Sachdeva, analyst at Phillip Nova, said the market was "caught between conflicting signals," noting that higher U.S. inventories and planned OPEC+ production increases are tempering expectations of near-term price gains.
Research indicates that when oil prices rise, they increase Bitcoin's mining costs, which tends to lower returns and increase volatility in cryptocurrency trading. Academic studies show volatility spillover effects become more pronounced during times of market stress such as economic recessions or major supply shocks.
PVM Oil Associates analyst Tamas Varga said "the corporate sector is benefiting from ongoing deregulation, whereas consumers are beginning to feel the strain of import tariffs, with both the labour and housing markets showing signs of weakness."
Both Brent and WTI benchmarks remain on track for a second consecutive weekly gain. The European Commission is preparing a sanctions package that would ban imports of Russian liquefied natural gas by January 2027, a year earlier than previously planned.
Priyanka Sachdeva, analyst at Phillip Nova, said the market was "caught between conflicting signals," noting that higher U.S. inventories and planned OPEC+ production increases are tempering expectations of near-term price gains.
Research indicates that when oil prices rise, they increase Bitcoin's mining costs, which tends to lower returns and increase volatility in cryptocurrency trading. Academic studies show volatility spillover effects become more pronounced during times of market stress such as economic recessions or major supply shocks.
PVM Oil Associates analyst Tamas Varga said "the corporate sector is benefiting from ongoing deregulation, whereas consumers are beginning to feel the strain of import tariffs, with both the labour and housing markets showing signs of weakness."
Both Brent and WTI benchmarks remain on track for a second consecutive weekly gain. The European Commission is preparing a sanctions package that would ban imports of Russian liquefied natural gas by January 2027, a year earlier than previously planned.
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
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