OIL PRICE: BRENT ABOVE $74, WTI NEAR $71 ANEW

REUTERS - Oct 18, 2024  - Crude oil futures steadied on Friday after strong U.S. retail sales data, but Chinese economic indicators remained mixed and prices were headed for their biggest weekly loss in more than a month on concerns about demand. 

Brent crude futures gained 8 cents, or 0.1%, to $74.53 a barrel by 0338 GMT, while U.S. West Texas Intermediate crude was at $70.82 a barrel, up 15 cents, or 0.2%.

Both contracts settled higher on Thursday for the first time in five sessions after data from the Energy Information Administration (EIA) showed that U.S. crude oil, gasoline and distillate inventories fell last week.

Brent and WTI are set to fall about 6% this week, their biggest weekly decline since Sept. 2, after OPEC and the International Energy Agency cut their forecasts for global oil demand in 2024 and 2025 and concerns eased about a potential retaliatory attack by Israel on Iran that could disrupt Tehran's oil exports.

IG market strategist Yeap Jun Rong said while oil prices remained subdued on Friday, there were signs of near-term stabilisation after the market factored in fading geopolitical risks over the past week.

"The recent run in stronger-than-expected US economic data does offer further relief around growth risks, but market participants are also side-eyeing any recovery in demand from China, given recent stimulus unleash," he said in an email.

U.S. retail sales increased slightly more than expected in September, with investors still pricing in a 92% chance for a Federal Reserve rate cut in November. 

Meanwhile, third-quarter economic growth in the world's top oil importer China was at its slowest pace since early 2023, though consumption and industrial output figures for September beat forecasts.

China's latest data dump offered somewhat of a mixed bag, with the country now officially falling short of its 5% growth target for the year and the absence of a sizeable fiscal push seems to leave some reservations on overall oil demand, said IG's Yeap.

China's refinery output also declined for the third straight month as weak fuel consumption and thin refining margins curbed processing.

Markets, however, remained concerned about possible price spikes given simmering Middle East tensions, with Lebanon's Hezbollah militant group saying on Friday it was moving to a new and escalating phase in its war against Israel after the killing of Hamas leader Yahya Sinwar.

Geopolitical risks, such as developments in the Middle East, will continue to drive fears of supply disruptions and in turn short-term spikes in oil prices, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

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