Oil prices fell more than 2% on Friday as investors fretted about weak Chinese demand and a possible slowdown in the pace of U.S. Federal Reserve rate cuts.
Brent crude futures fell $1.52, or 2.09%, to $71.04 a barrel. WTI crude futures fell $1.68, or 2.45%, to $67.02.
For the week, Brent fell nearly 4%, while WTI fell nearly 5%.
China’s oil refineries processed 4.6% less crude in October than a year earlier due to plant closures and reduced operating rates at smaller independent refineries.
The country’s factory output growth slowed last month and demand woes in the real estate sector showed no signs of abating, adding to investors’ concerns about the economic health of the world’s largest importer of crude.
The headwinds from China continue, and any incentives the Trump administration has put forward with a new round of tariffs could be undermined.
US President-elect Donald Trump has vowed to end China’s most-favored-nation trade status and impose tariffs of more than 60% on Chinese imports.
China’s 2025 growth forecasts are being modestly downgraded after expectations of significant tariff hikes under Trump. However, if the trade war escalates further, further declines are likely.
Oil prices have also fallen this week as leading forecasters say global demand growth is slowing.
“Global oil demand is weakening,” International Energy Agency (IEA) Executive Director Fatih Birol said at the COP29 summit on Friday.
This has been evident for a long time, largely due to China’s slowing economic growth and the growing penetration of electric cars worldwide.
The IEA said that even if cuts from OPEC+ continue, global oil supplies will continue to grow It projects it will exceed demand by more than 1 million barrels per day in 2025.
Meanwhile, OPEC lowered its forecast for global oil demand growth this year and in 2025, citing weakness in China, India, and other regions.
U.S. retail sales rose slightly more than expected in October, suggesting the economy started the fourth quarter on a strong note.
Strong U.S. economic data is holding the December Fed rate cut in balance. The data has added to the debate among Federal Reserve policymakers over the pace and scope of rate cuts, as investors further downgrade their expectations for a rate cut at the central bank’s December meeting.
Boston Federal Reserve Bank President Susan Collins did not rule out a December rate cut. The odds of a 25 basis point rate cut in December are between 50% and 60%. It would not be surprising if nothing is done in December and the year ends with a wait and see.
Low interest rates generally spur economic growth, supporting fuel demand.
