Investing.com– Oil prices retreated Friday, but were still headed for a weekly gain as a bumper U.S. interest rate cut helped quell some fears of slowing demand. 

At 08:20 ET (12:20 GMT),  fell 0.6% to $74.47 a barrel, while dropped 0.5% to $70.79 a barrel. 

Oil heads for weekly gains on rate cut cheer 

Crude prices have 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 by the Federal Reserve.

was trading up about 3.95% this week, while WTI futures were up 4.4%. 

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. 

A softer 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 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.

“China has obviously been the key concern when it comes to demand, but there have also been reports of refiners in Europe cutting run rates due to poor margins,” said analysts at ING, in a note.

(Ambar Warrick contributed to this article.)