Investing.com-- Oil prices fell slightly in Asian trade on Friday as traders locked-in recent profits, with crude headed for a weekly gain as a bumper U.S. interest rate cut helped quell some fears of slowing demand.
Crude prices staged a strong recovery from near three-year lows hit earlier in September, with a bulk of their rebound coming this week as the dollar retreated on a 50 basis point rate cut by the Federal Reserve.
Increased tensions in the Middle East also aided crude, after Israel allegedly exploded pagers and walkie talkies belonging to Hezbollah members, sparking vows of retaliation. Fighting in and around Gaza also continued.
But despite the weekly bounce, bigger gains in crude were held back by persistent concerns over slowing demand, especially in top importer China. U.S. fuel demand also appeared to be cooling with the end of the travel-heavy summer season.
Brent oil futures expiring in November fell 0.4% to $74.60 a barrel, while West Texas Intermediate crude futures fell 0.4% to $70.86 a barrel by 21:09 ET (01:09 GMT).
Oil heads for weekly gains on rate cut cheer
Brent was trading up about 3.4% this week, while WTI futures were up 4.6%.
A softer dollar aided crude prices after the Fed cut interest rates by the top end of market expectations and announced an easing cycle, which traders bet will help spur economic growth in the coming quarters.
Lower rates usually bode well for economic activity, which in turn is expected to buoy crude demand.
China demand concerns persist
But China remained a key point of contention for crude markets, as economic readings from the world’s biggest oil importer showed little signs of improvement.
The People’s Bank of China kept benchmark lending rates unchanged on Friday, despite mounting calls on Beijing to unlock more stimulus for the economy.
Data released earlier in September showed Chinese refinery output slowed for a fifth straight month in August, while the country’s oil imports also remained mostly weak.
Concerns over China dragged oil prices to a near three-year low earlier this month, and have limited any major recovery in crude.