Oil prices fell over 2% on Friday, with Brent settling at $71.04 per barrel, down $1.52 (-2.09%), and WTI at $67.02, down $1.68 (-2.45%). For the week, Brent dropped 4%, while WTI declined 5%, driven by weaker Chinese demand and uncertainty over U.S. Federal Reserve rate cuts.
China’s crude refining in October fell 4.6% year-over-year due to plant closures and reduced output at smaller refiners, raising concerns about the economic health of the world’s largest crude importer. Weak factory output and persistent property sector woes further dampened investor sentiment. Adding to the pressure, President-elect Donald Trump pledged higher tariffs on Chinese imports, fueling concerns of an escalating trade war. Goldman Sachs lowered its 2025 growth forecast for China, with the potential for larger downgrades if tensions escalate. The International Energy Agency (IEA) and OPEC both flagged slowing global demand growth, citing China’s economic slowdown and the rise of electric vehicles. The IEA predicts oil supply will exceed demand by over 1 million barrels per day in 2025, even with OPEC+ cuts. In the U.S., stronger-than-expected October retail sales sparked debate over Federal Reserve rate cuts. While some policymakers suggested a December rate reduction remains possible, market expectations for such a move fell to about 60%. Lower rates typically boost fuel demand by spurring economic activity.