Oil futures experienced a significant drop on Friday, with prices declining over 7% for the week due to concerns about China’s economic growth and a mixed outlook for the Middle East. Key highlights include:
Price Movement: Brent crude fell by $1.39 (1.87%) to $73.06 per barrel, while U.S. West Texas Intermediate (WTI) dropped by $1.45 (2.05%) to settle at $69.22 per barrel.
Weekly Decline: This marks the largest weekly decline since early September, with Brent down more than 7% and WTI around 8%.
China’s Economic Impact: China’s economy grew at its slowest pace since early 2023 in Q3, raising concerns about future oil demand. Although September consumption and industrial output exceeded forecasts, refinery output has decreased for six consecutive months.
Electric Vehicle Influence: The rise of electric vehicles in China, with sales jumping 42% in August, is also affecting oil demand dynamics.
Geopolitical Factors: U.S. President Biden’s comments on the potential for resolving tensions between Israel and Iran have contributed to a decrease in the geopolitical risk premium in oil prices. However, escalating tensions remain, particularly with Hezbollah’s response to recent conflicts.
U.S. Production Records: U.S. crude production reached a record high of 13.5 million barrels per day, contributing to a slight alleviation of growth concerns despite the overall bearish sentiment in the market.
Market participants continue to monitor developments in both China and the Middle East, evaluating their potential impact on future oil demand and prices.