Oil prices dip amid weak Chinese spending data

Oil futures retreated from multi-week highs on Monday, weighed down by disappointing consumer spending data from China, the world’s largest oil importer.

Brent crude futures declined by 32 cents, or 0.4%, to $74.17 per barrel by 1300 GMT, following Friday’s close at their highest level since November 22. Similarly, U.S. West Texas Intermediate (WTI) crude fell 27 cents, or 0.4%, to $71.02 per barrel, after reaching its strongest close since November 7 in the previous session.

While China’s industrial output growth slightly accelerated in November, retail sales came in below expectations, intensifying pressure on Beijing to implement more robust stimulus measures to counter economic fragility under the renewed U.S. trade tariffs of a second Trump administration.

“Risk aversion due to weaker-than-expected Chinese economic data is weighing on crude prices,” said Giovanni Staunovo, an analyst at UBS. “Market participants are waiting for clear signals on how Chinese officials plan to boost the economy.”

Concerns over China’s economic outlook have also influenced OPEC+’s decision to delay increasing oil output until April.

“Despite the stimulus measures in place, consumers are not responding, and without significant changes in spending habits, China’s economic growth will remain constrained,” said John Evans of oil brokerage PVM.

Investors also engaged in profit-taking as they awaited the U.S. Federal Reserve’s interest rate decision this week.

Tony Sycamore, a market analyst at IG, noted that light profit-taking was expected after last week’s 6% surge in oil prices. He added that with the holiday season approaching, many banks and funds had likely reduced risk by closing positions.

The Fed is widely expected to lower interest rates by 0.25 percentage points at its December 17-18 meeting, which could also shed light on its plans for further rate cuts in 2025 and beyond. Lower rates typically stimulate economic growth and bolster oil demand.

Supply concerns helped limit the downside for oil prices, as the U.S. hinted at tightening sanctions on Russia and Iran.

Treasury Secretary Janet Yellen stated on Friday that the U.S. is considering additional sanctions on “dark fleet” tankers and may target Chinese banks to curb oil revenue supporting Russia’s war in Ukraine.

Meanwhile, fresh U.S. sanctions on entities trading Iranian oil have driven the price of Iranian crude sold to China to multi-year highs, with the incoming Trump administration expected to intensify pressure on Tehran.