Brent Crude Futures fell $1.39, or 1.87%, to $73.06 a barrel. U.S. West Texas Intermediate crude settled at $69.22 a barrel, down $1.45 or 2.05%.
Brent closed down more than 7% this week, while WTI lost about 8%, marking its biggest weekly declines since September 2, when OPEC and the International Energy Agency cut their forecasts for global oil demand in 2024 and 2025.
In China, the world’s top oil importer, the economy grew at the slowest pace since early 2023 in the third quarter, although September consumption and industrial production exceeded forecasts.
“China is key on the demand side of the equation, so that’s weighing heavily on prices here today,” said John Kilduff, partner at Again Capital in New York.
Output at China’s refineries fell for the sixth straight month as tight refining margins and weak fuel consumption slowed processing. “We cannot ignore the impact of electric vehicles in China,” said Neil Atkinson, a Paris-based independent energy analyst and former head of the IEA’s oil division. “There are several factors at play here, China’s economic weakness but also the move towards transport electrification.”
Sales of electric vehicles in China increased by 42% in August and reached a record of more than one million vehicles.
Meanwhile, China’s central bank launched two financing plans that will initially inject 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 reports on additional information economic stimulus left market participants disappointed,” said Rishi Rajanala, associate at Aegis Hedging.
US President Joe Biden said Friday that there is an opportunity to deal with Israel and Iran in a way that potentially ends their conflict in the Middle East for a time.
“We lost additional chunks of the geopolitical risk premium in the oil price due to talk of this all coming to an end,” Kilduff of Again Capital said.
Biden, on a visit to Berlin, also told reporters that he understands how and when Israel will respond to Iran’s missile attacks, something investors continue to eagerly await, Alex Hodes, an analyst at energy brokerage StoneX, said in a note.
Following the assassination of Hamas leader Yahya Sinwar, the Lebanese militant group Hezbollah said on Friday it was moving into a new and growing phase in its fight against Israeli troops.
This dashed Friday’s hopes that Sinwar’s death would hasten an end to the escalating war in the Middle East.
In the United States, crude oil production broke another record last week, the Energy Information Administration reported on Thursday, as output rose by 100,000 barrels per day (bpd) in the week to October 11 to 13.5 million bpd, from its previous high of 13.4. million bpd first arrived two months ago.
To help give a floor to prices, the EIA also said U.S. inventories of crude oil, gasoline and distillates fell last week.
And U.S. retail sales rose slightly more than expected in September, with investors still estimating a 92% chance that the Federal Reserve will cut rates in November.
“Positive U.S. economic data has helped ease some growth concerns, but market participants continue to monitor potential demand recovery in China following recent stimulus measures,” said Hani Abuagla, senior market analyst. from XTB MENA.
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