Oil prices fell more than 2% on Friday as investors worried about weaker Chinese demand and a potential slowdown in US Federal Reserve interest rate cuts. Brent crude futures dropped $1.52 to settle at $71.04 a barrel, while US West Texas Intermediate crude futures fell $1.68 to settle at $67.02.
China’s oil refiners processed 4.6% less crude in October due to plant closures and reduced operating rates, according to data from the National Bureau of Statistics. This adds to concerns about the economic health of the world’s largest crude importer.
The US President-elect Donald Trump has pledged to end China’s most-favored-nation trading status and impose tariffs on Chinese imports over 60%, which could be damaged by a new round of tariffs. Goldman Sachs Research economists have lowered their 2025 growth forecast for China, citing significant tariff increases under Trump.
Major forecasters also indicated slowing global demand growth, with the International Energy Agency (IEA) forecasting a surplus of over 1 million barrels per day in 2025 if cuts remain in place from OPEC+. The US retail sales data showed a slight increase in October, which has sparked debate among Federal Reserve policymakers about the pace and extent of interest rate cuts.
The Fed Bank of Boston President Susan Collins did not rule out a December rate cut, but Matador Economics’ chief economist Tim Snyder said he wouldn’t be surprised if nothing was announced. The odds for a 25 basis rate cut in December have dropped to between high 50s-60%.
Source: https://www.reuters.com/business/energy/oil-dips-oversupply-concerns-heads-weekly-loss-2024-11-15