Oil prices retreated on Friday as weak economic data from China, a firmer U.S. dollar, and expectations of rising global supply combined to dampen market sentiment. Traders anticipate that China’s imports could decline as manufacturing activity slows, while the OPEC alliance prepares to raise production levels.
Brent crude slipped to $63.96 per barrel, representing a 0.07% decrease from Thursday’s close at $64.01. Similarly, West Texas Intermediate (WTI) futures eased by 0.11% to $60.06, down from the previous $60.13 per barrel.
This comes after the U.S. Federal Reserve (Fed) reduced its benchmark interest rate by 25 basis points on Wednesday to a range between 3.75% and 4%. While the move was widely expected, Fed Chair Jerome Powell cautioned that another rate cut in December was not guaranteed, stating that the decision “is not a foregone conclusion.”
Following Powell’s remarks, the U.S. dollar strengthened, adding downward pressure on oil prices as a stronger greenback makes crude more expensive for buyers using other currencies.
Adding to the bearish tone, new data from China’s National Bureau of Statistics revealed that factory activity contracted for the seventh consecutive month in October. The official manufacturing Purchasing Managers’ Index (PMI) slipped to 49.0 from 49.8 in September—below the 50 threshold that separates expansion from contraction.
The continued slump in China’s manufacturing sector underscores the fragility of its economic recovery, despite recent optimism following a temporary truce in the U.S.-China trade dispute.
Meanwhile, U.S. commercial crude inventories dropped by 6.9 million barrels last week to 416 million barrels, significantly exceeding analysts’ expectations of a 900,000-barrel draw. Strategic petroleum reserves rose slightly by 500,000 barrels to 409.1 million, while gasoline stocks fell by 5.9 million barrels to 210.7 million.
Market focus now shifts to the OPEC+ meeting scheduled for November 2, where the alliance is expected to announce an additional production increase of 137,000 barrels per day for December.
Analysts believe that the combination of weak demand indicators and rising supply could keep oil prices under pressure in the short term, even as global economic recovery efforts continue.
