SINGAPORE (Reuters): Oil prices settled more than 2 percent late on Friday as investors worried about weaker Chinese demand and a potential slowdown in the pace of interest rate cuts by the U.S. Federal Reserve.

Brent crude futures were down $1.52, or 2.09 percent, at $71.04 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up $1.68, or 2.45 percent, at $67.02.

For the week, Brent is down about 4%, while WTI is down about 5%.

China’s oil refiners processed 4.6 percent less crude in October than a year earlier due to plant shutdowns and reduced operating rates at smaller independent refiners, data from the National Bureau of Statistics showed on Friday.

The country’s factory output growth slowed last month and demand problems in its real estate sector showed little sign of abating, adding to investor concerns about the economic health of the world’s biggest crude importer.

“The headwinds from China persist and any proposed stimulus could be hurt by another round of tariffs from the Trump administration,” said John Kilduff, partner at Again Capital in New York.

US President-elect Donald Trump has pledged to end China’s most-favored-nation trade status and impose tariffs on Chinese imports of more than 60 percent – far higher than those imposed during his first term.

Goldman Sachs Research economists modestly cut their 2025 growth forecast for China, the bank said in a note, following expectations of significant tariff increases under Trump.

“However, we would likely make larger downgrades if the trade war were to escalate further,” Goldman Sachs Research chief economist Jan Hatzius said in the note.

Oil prices also fell this week as major forecasters pointed to a slowdown in global demand growth.

“Global oil demand is increasingly weak,” International Energy Agency (IEA) Executive Director Fatih Birol said at the COP29 summit on Friday.

“We’ve been seeing this for some time, and it’s mainly driven by the slowdown in Chinese economic growth and the increasing penetration of electric cars around the world.”

The IEA estimates that global oil supply will exceed demand by more than 1 million barrels per day in 2025, even if OPEC+ cuts remain in place.

Meanwhile, OPEC cut its forecast for global oil demand growth for this year and 2025, highlighting weakness in China, India and other regions.

REDUCING THE FED RATE IN THE BALANCE SHEET

US retail sales rose slightly more than expected in October, suggesting the economy started the fourth quarter on a strong note.

“This morning’s economic data was strong and notable, so things are holding somewhat steady on the US demand picture,” Again Capital’s Kilduff said.

The data added to the debate among Federal Reserve policymakers over the pace and extent of interest rate cuts, as investors further reduced expectations for a rate cut at the central bank’s December meeting.

Lower interest rates typically boost economic growth, helping fuel demand.

However, Boston Federal Reserve Bank President Susan Collins did not rule out an interest rate cut in December when speaking on Bloomberg Television.

“Looking at these numbers, there’s nothing to force the Fed to really go crazy, I think the odds of a 25 key rate cut for December have dropped to between 50 and 60 percent,” said Matador Economics Chief Economist Tim . Snyder.

“I wouldn’t be surprised if we don’t see anything in December and we’ll have to wait and see how the year plays out,” Snyder added.

(Reporting by Georgina McCartney in Houston, Robert Harvey and Enes Tunagur in London, Nicole Jao in New York and Gabrielle Ng in Singapore; Editing by Kirsten Donovan, Marguerita Choy and Andrea Ricci) – Reuters