Oil investments dropped from their highest levels in weeks on Monday, forced by weakness in consumer purchasing in China, the world’s most well-known oil importer.
Brent crude futures decreased by 32 cents, or 0.4%, to $74.17 a barrel by 1300 GMT after settling on Friday at their highest since Nov 22, according to Brecorder.
The U.S. West Texas Intermediate crude fell by 27 cents, or 0.4%, to $71.02 after marking its highest close since Nov. 7 in the last session.
An IG market analyst Tony Sycamore, said that light profit-taking was predicted after prices rose to more than 6% last week.
He also said that many banks and funds are most likely to close their books given the reduction in appetite for positions during the holiday season.
The Fed is foreseen to cut interest rates by a quarter of a percentage point in December. The 17-18 meeting will also provide an updated look at how much more Fed officials think they will reduce rates in 2025 and maybe also while going into 2026.
Lower interest rates can promote economic growth as well as accelerate oil demands.
Alongside limited oil price decreases were supply damage concerns on the possibility of more U.S. restrictions against Russia and Iran.
U.S. Treasury Secretary Janet Yellen informed Reuters on Friday that the U.S. is exploring more restrictions on “dark fleet” tankers and could make Chinese banks a target for limiting oil residues that help fund Russia as it continues the war in Ukraine.
Fresh U.S. sanctions on constituents trading Iranian oil are already leading prices of the crude sold to China to their highest in years, with the incoming Trump administration to ramp up pressure on Iran.
Chinese industrial output grew a little in November, but retail sales were lower than expected, keeping pressure on Beijing to bring up motivation for a fragile economy that was facing U.S. trade declined under a second Trump administration.
“Risk off following some weaker than expected Chinese economic data is weighing on crude prices. Market participants are still awaiting guidance on how Chinese officials plan to stimulate the economy,” analyzed UBS analyst Giovanni Staunovo.
The Chinese ignored the idea given by the oil-producing group OPEC+ to delay plans for higher output until April.
“Whatever stimulus is being deployed, consumers are not buying into it; and without a serious sea-change in personal spending behaviour, China’s economic fortunes will be stunted,” informed John Evans at oil broker PVM.
Traders also made profits while waiting for the U.S. Federal Reserve’s last word on interest rates this week.