By Adedapo Adesanya
The oil market closed lower by more than 2 per cent on Friday due to weaker Chinese demand and a potential slowing in the pace of US Federal Reserve interest rate cuts.
Weak data from China continued to affect the market, as Brent crude futures lost $1.52, or 2.09 per cent to trade at $71.04 a barrel and the US West Texas Intermediate (WTI) crude declined by $1.68 or 2.45 per cent at $67.02 per barrel.
China’s refinery throughput in October fell by 4.6 per cent from last year, down from a year earlier for a seventh month.
Official data showed that refining plant closures offset the ramp-up of a newly started complex and demand from holiday travel.
Refiners processed 59.54 million metric tons of crude oil last month, data from the Chinese National Bureau of Statistics (NBS) showed, equivalent to 14.02 million barrels per day.
The country’s factory output growth slowed last month and demand woes in its property sector showed few signs of abating.
This added to investors’ concerns over the economic health of the world’s largest crude importer.
For the week, Brent fell around 4 per cent while the WTI declined around 5 per cent.
US President-elect Donald Trump has pledged to end China’s trading status and impose tariffs on Chinese imports in excess of 60 per cent.
Analysts have also given a poor outlook as Goldman Sachs Research economists have modestly lowered their 2025 growth forecast for China.
The bank said in a note that is caused by expectations of significant tariff increases under Trump.
The International Energy Agency (IEA) forecasts global oil supply to exceed demand by more than 1 million barrels per day in 2025 even if cuts remain in place from the Organisation of the Petroleum Exporting Countries and its allies, OPEC+.
OPEC, meanwhile, cut its forecast for global oil demand growth for this year and 2025, highlighting weakness in China, India and other regions.
Support also came from retail sales in the US which increased slightly more than expected in October. This is a sign that the world’s largest economy kicked off the fourth quarter on a strong note.
The data also put in perspective the extent to which the US Federal Reserve will cut interest rates as investors further downgraded their expectations for a rate reduction at the central bank’s December meeting.
Lower interest rates typically spur economic growth, aiding fuel demand.