By Georgina McCartney
HOUSTON (Reuters) -Oil prices lost $1 per barrel on Friday and were bound for a weekly loss as investors fretted about weaker Chinese demand and a potential slowing in the pace of U.S. Federal Reserve interest rate cuts.
Brent crude futures dropped $1.09, or 1.5%, to $71.47 a barrel by 12:05 p.m. EDT. U.S. West Texas Intermediate crude futures were down $1.18, or 1.7%, at $67.52.
For the week, Brent is on track to fall 3.3% while WTI is set to decline 4.1%.
China’s oil refiners in October processed 4.6% less crude than a year earlier because of plant closures and reduced operating rates at smaller independent refiners, data from the National Bureau of Statistics showed on Friday.
The country’s factory output growth slowed last month and demand woes in its property sector showed few signs of abating, adding to investors’ concerns over the economic health of the world’s largest crude importer.
“The headwinds out of China are persisting, and whatever stimulus they put forward could be damaged by a new round of tariffs by the Trump administration,” said John Kilduff, partner at Again Capital in New York.
U.S. President-elect Donald Trump has pledged to end China’s most-favored-nation trading status and impose tariffs on Chinese imports in excess of 60% – much higher than those imposed during his first term.
Elsewhere, U.S. retail sales increased slightly more than expected in October, suggesting the economy kicked off the fourth quarter on a strong note.
“The economic data this morning was strong and notable so that is keeping things somewhat stable with regard to what the U.S. demand picture should be,” Again Capital’s Kilduff said.
The data added to the debate among Federal Reserve policymakers over the pace and extent of interest rate cuts as investors further downgraded their expectations for a rate reduction at the central bank’s December meeting.
But Federal Reserve Bank of Boston President Susan Collins did not rule out a December rate cut when speaking on Bloomberg’s television channel on Friday.
“Looking at those numbers, there is nothing forcing the Fed to get real crazy about it, I think the odds for a 25 basis rate cut for December have dropped to between high 50s-60%,” said chief economist at Matador Economics, Tim Snyder.
“I wouldn’t be surprised if we do not see anything in December, and have to wait and see how the year ends,” Snyder added.
Lower interest rates typically spur economic growth, aiding fuel demand.
Oil prices also fell this week as major forecasters indicated slowing global demand growth.
“Global oil demand is getting weaker,” said International Energy Agency (IEA) Executive Director Fatih Birol on Friday at the COP29 summit.
“We have been seeing this for some time and this is mainly driven by the slowing Chinese economic growth and the increasing penetration of electric cars around the world.”
The IEA forecasts global oil supply to exceed demand by more than 1 million bpd in 2025 even if cuts remain in place from OPEC+.
OPEC meanwhile cut its forecast for global oil demand growth for this year and 2025, highlighting weakness in China, India and other regions.
Providing a floor to the price declines, U.S. gasoline stocks fell by 4.4 million barrels last week to the lowest since November 2022, the Energy Information Administration said, outweighing a 2.1 million barrel crude oil stockbuild.
“Without the weekly statistics on U.S. oil inventories the major oil contracts would have probably settled lower (on Thursday). Gasoline supported the whole complex,” PVM analyst Tamas Varga said.
This post is originally published on INVESTING.
