Oil Drop 2.5% For The Week As Fed, China Worries Grow

But analysts differ on China's true demand outlook: File Image/Pixabay

Oil trading on Friday was firmly range bound and contributed to a weekly decline of about 2.5 percent, as investors continued to focus on the one-two punch of troubling Chinese demand and rate cut disappointments.

Brent settled up 6 cents at $72.94 per barrel, while West Texas Intermediate settled up 8 cents at $69.46 per barrel.

In the previous session, state-owned refiner Sinopec said in its annual energy outlook that China's crude imports could peak as soon as 2025 and oil consumption would peak by 2027, as demand for diesel and gasoline weakens.

This flew completely in the face of Rapidan Energy Group founder Bob McNally recently stating in a report that global gasoline consumption will keep growing through to 2035, even in the EV mecca of China, and that there's "no end in sight" for consumption of the motor fuel.

As for earlier statements by U.S. Federal Reserve chair Jerome Powell that he might slow the pace of subsequent cuts to just two quarter percentage points in 2025, John Kilduff, founding partner at Again Capital, said, "The fears over the Fed abandoning support for the market with its interest rate schemes have gone out the window."

Bart Melek, global head of commodity strategy at TD Securities, added that the Fed's stance is "not a very positive development for risk assets, oil being one of them."

All of this combined with persistent bearish sentiment caused Bloomberg to observe that "Crude has been range bound since the middle of October, and prices are on course for their smallest annual trading band since 2019."

In this period of low energy prices, it didn't come as a surprise when it was learned on Friday that S&P Global Ratings cut Canadian oil company Suncor Energy Inc.'s long-term credit rating one notch to a step above junk.

S&P said in a statement that Suncor's revenue will probably decline about 10 percent next year, hurt by lower oil prices and subdued refining profits.