Oil prices fall, down 7% weekly on China demand woes, Middle East conflict uncertainties

Oil futures fell on Friday, falling more than 7% weekly after data showed China’s economic growth slowed and investors digested a mixed Middle East outlook.
Brent crude futures fell $1.39, or 1.87%, to $73.06 a barrel. WTI crude fell $1.45, or 2.05%, to settle at $69.22 a barrel.
Brent, WTI post the biggest weekly declines since September 2. Brent ended down more than 7% this week, while WTI fell nearly 8%. It posted its biggest weekly decline since September 2, when OPEC and the International Energy Agency (IEA) cut their global oil demand forecasts for 2024 and 2025.
China, the world’s largest oil importer, grew at its slowest pace since early 2023 in the third quarter, but consumption and industrial production in September beat estimates.
China plays a key role on the demand side of the equation, so it has a huge impact on prices. China’s refinery output fell for a sixth straight month as low refinery margins and weak fuel consumption constrained processing.
The impact of electric vehicles in China is showing. Electric vehicle sales in China rose 42% in August, reaching a record high of more than a million vehicles.
Meanwhile, the People’s Bank of China has launched two financing plans that will pump an initial 800 billion yuan ($112.38 billion) into the stock market through newly created monetary policy tools.
Chinese data shows tentative signs of improvement, but recent briefings on additional economic stimulus have disappointed market participants.
Biden says there is potential for a temporary end to the conflict between Israel and Iran in the Middle East.
Following the killing of Hamas leader Yahya Sinwar, Lebanon’s Hezbollah militant group entered a new and escalating phase of fighting with Israeli troops on Friday, dashing hopes that Sinwar’s death on Friday would hasten the end of the escalating war in the Middle East.
U.S. crude oil production hits record highs. In the U.S., crude oil production hit another record last week, the Energy Information Administration (EIA) reported on Thursday, with output rising by 100,000 barrels per day (bpd) in the week to Oct. 11, from a previous peak of 13.4 million bpd two months ago to 13.5 million bpd.
Helping to provide a floor to prices, the EIA said U.S. crude, gasoline, and distillate inventories fell last week.
And U.S. retail sales rose slightly more than expected in September, with investors still pricing in a 92% chance of a Federal Reserve rate cut in November.
Positive U.S. economic data helped ease some growth concerns, but market participants continue to monitor a potential demand recovery in China following recent stimulus measures.

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