China Refinery Reductions Contribute To A 5% Weekly Loss For Oil

Analysts also fear the Fed won't cut rates in December: File Image/Pixabay

More disturbing data from China and the resurfacing of concern over a familiar bogeyman – the U.S. Federal Reserve – were said to be the two main drivers on Friday of oil experiencing another drop – and contributing to another weekly loss.

After data from the National Bureau of Statistics showed that China's oil refiners in October processed 4.6 percent less crude than a year earlier because of plant closures and reduced operating rates at independent refiners, Brent settled down $1.52 to $71.04 per barrel.

West Texas Intermediate settled down $1.68 at $67.02 and suffered a weekly drop of around 5 percent, while Brent fell about 4 percent for the week.

Traders on Friday also reportedly reacted to news that Ukraine is calling for action to force Russia toward peace, even though Ukraine president Volodymyr Zelenskiy said talks between Germany and Russia will do little to advance the cause.

Indeed, Rebecca Babin, senior energy trader at CIBC Private Wealth Group, remarked, "Everyone is just looking for an excuse to sell or get short."

As for those worried about the Fed, U.S. retail sales increased slightly more than expected in October, and this caused investors to further downgrade expectations for a rate reduction at the central bank's December meeting.

Tim Snyder, chief economist at Matador Economics, said, "I think the odds for a 25 basis rate cut for December have dropped to between high 50s-60 percent….I wouldn't be surprised if we do not see anything in December, and have to wait and see how the year ends."

In other oil news on Friday, industry sources told media that refineries in Russia have started to reduce run rates and some were considering shutting in operations due to heavy losses resulting from export restrictions, rising oil prices, sanctions, and Ukrainian drone attacks.

The Tuapse, Ilsky, and Novoshakhtinsky refineries have either halted or reduced crude runs in recent months, according to the sources; the Tuapse oil refinery on the Black Sea coast, owned by Rosneft, suspended its 240,000 barrels per day (bpd) of output in October.