Crude Oil Futures Stabilize as Mixed Signals Cloud Global Demand Outlook

Crude oil futures steadied on Friday after an uptick in U.S. retail sales, but concerns about global demand weighed on the market as mixed economic indicators from China persisted. Prices remained on course for their largest weekly loss in over a month.

As of 0338 GMT, Brent crude futures edged up by 8 cents, or 0.1%, to $74.53 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 15 cents, or 0.2%, to $70.82 per barrel. Both benchmarks had risen in Thursday’s session, marking the first gain in five trading days. The increase followed the U.S. Energy Information Administration’s (EIA) report showing a drop in U.S. crude oil, gasoline, and distillate inventories, which provided temporary relief to the market.

Despite the slight rebound, Brent and WTI were set to end the week down by about 6%, marking their biggest weekly decline since early September. This downturn was largely driven by downward revisions from both OPEC and the International Energy Agency (IEA), which cut their global oil demand forecasts for 2024 and 2025. Additionally, fears of a major supply disruption due to a potential Israeli retaliation against Iran have eased.

U.S. retail sales data showed a stronger-than-expected rise in September, further solidifying expectations that the Federal Reserve may cut interest rates in November. Despite the positive U.S. data, concerns linger about demand from China, the world’s top oil importer, where third-quarter economic growth was the slowest since early 2023.

While China’s industrial output and consumption figures for September surpassed expectations, the overall growth rate fell short of the government’s 5% annual target. Additionally, China’s refinery output dropped for the third consecutive month, reflecting weak domestic fuel consumption and reduced refining margins.

Though the economic indicators from China painted a mixed picture, the markets remained attentive to geopolitical risks. Rising tensions in the Middle East, particularly following statements from Hezbollah about intensifying its conflict with Israel, added to concerns about potential supply disruptions that could lead to sudden spikes in oil prices.

Priyanka Sachdeva, a senior market analyst at Phillip Nova, noted that developments in the Middle East are likely to continue influencing short-term price fluctuations, with fears of supply disruptions contributing to market volatility.

Overall, while short-term spikes in oil prices may occur due to geopolitical risks, the larger demand outlook remains clouded by slower growth in China and recent downward revisions from key forecasting agencies.