(Bloomberg) — Oil retreated from a two-week high as the Federal Reserve dimmed hopes for more U.S. interest rate cuts, countering a seventh weekly decline in American crude stockpiles.

Futures slumped as much as 2% in New York, snapping five days of gains. While the Fed cut rates for the first time in a decade, Chairman Jerome Powell said it wasn’t the start of an extended cycle of monetary-policy easing to protect the economy. U.S. crude inventories fell by 8.5 million barrels last week, more than triple the median estimate in a Bloomberg survey.

Oil last month capped its smallest monthly move since 1991 as it was caught between fears global demand may slow and concerns crude flows from the Middle East may be disrupted. The U.S. on Wednesday imposed sanctions on Iran’s foreign minister, deepening tensions between Tehran and Washington.

“The comments from the Fed would likely have dampened energy demand and most asset classes are currently experiencing reversals,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. Declining American stockpiles suggests “that either demand is strong in the U.S., or they are exporting more to cover the lack of supply worldwide,” he said.

West Texas Intermediate for September delivery lost 68 cents, or 1.2%, to $57.90 a barrel on the New York Mercantile Exchange as of 7:59 a.m. London time. The contract rose 53 cents to $58.58 on Wednesday, capping a 0.2% gain for July.

Brent crude for October settlement decreased 58 cents, or 0.9%, to $64.47 a barrel on the ICE Futures Europe exchange. The September contract expired Wednesday after adding 0.7% to close at $65.17. The global benchmark crude traded at a $6.51 premium to WTI for the same month.

Financial markets were whipsawed during Powell’s press conference as he struggled to define the rate path ahead. He attempted to explain how the cuts were mainly defensive, aimed at supporting the economy in a time of too low inflation, weakening global growth and trade tensions.

U.S. crude stockpiles dropped to the lowest level since November 2018 last week, according to Energy Information Administration data Wednesday. Oil output expanded to 12.2 million barrels a day, climbing for the first time in three weeks and rebounding from the lowest since October 2018.

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