By Shariq Khan
NEW YORK (Reuters) -Oil prices fell almost 2% on Friday. There was little change this week, at less than $80 a barrel, as investors tempered expectations about demand growth from top oil importer China.
Brent crude futures fell $1.36, or 1.7%, to settle at $79.68 a barrel. U.S. West Texas Intermediate crude futures fell $1.51, or 1.9%, to $76.65.
Last week, Brent crude ended at $79.66 per barrel and WTI closed at $76.84.
On Thursday, data from China showed China’s economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial production slowing and unemployment rising.
That has fueled concerns among traders about a slump in demand from the top oil importer, where refiners sharply cut crude processing rates last month due to tepid fuel demand.
The Organization of the Petroleum Exporting Countries on Monday lowered its forecast for oil demand growth this year, citing weakness in China. The Paris-based International Energy Agency also cited weak demand in China when it cut its 2025 forecasts on Tuesday.
“It was a volatile week in oil markets: on the one hand, there were fears of supply disruptions due to a wider war in the Middle East, but on the other hand, slowing growth in China forced revisions to demand forecasts ” said Andrew Lipow, president of energy. consulting firm Lipow Oil Associates.
Oil futures rose at the start of the week as traders braced for retaliation by Iran against Israel after the killing of a Hamas leader in Tehran last month. But some of that risk has been priced out because Iran has not yet struck, analysts at Commerzbank (ETR:) Research wrote on Friday.
“So far, if anything, the supply disruptions have been more theoretical than actual,” said Brett Friedman, an associate at market data provider OptionMetrics. “This allows the market to focus on the demand side,” Friedman said.
A new round of negotiations on a ceasefire in Gaza began in Qatar on Thursday. It has been put on hold until next week, with the parties involved sending mixed signals about progress.
“Provided the situation in the Middle East does not escalate further, oil prices are likely to tread water,” Commerzbank analysts said.
A series of data from the US kept a floor on oil prices as retail sales exceeded analyst expectations and fewer Americans filed new unemployment claims last week, leading to renewed optimism about economic growth in oil’s largest market.
Oil prices could lose direction until the US Federal Reserve decides whether to cut interest rates at its September meeting, independent oil analyst Gaurav Sharma said.
Low liquidity likely fueled price volatility this week as many European and North American investors were still on vacation, UBS analyst Giovanni Staunovo said.
