(This Dec 20 story has been to remove the reference to China's crude imports peaking as soon as 2025 in paragraph 9)

By Arathy Somasekhar

HOUSTON (Reuters) - Oil prices settled little changed on Friday as markets weighed Chinese demand and interest rate-cut expectations after data showed cooling U.S. inflation.

Brent crude futures closed up 6 cents, or 0.08%, at $72.94 a barrel. U.S. West Texas Intermediate crude futures rose 8 cents, or 0.12%, at $69.46 per barrel.

Both benchmarks ended the week down about 2.5%.

The U.S. dollar retreated from a two-year high, but was heading for a third consecutive week of gains, after data showed cooling U.S. inflation two days after the Federal Reserve cut interest rates but trimmed its outlook for rate cuts next year.

A weaker dollar makes oil cheaper for holders of other currencies, while rate cuts could boost oil demand.

Inflation slowed in November, pushing Wall Street's main indexes higher in volatile trading.

"The fears over the Fed abandoning support for the market with its interest rate schemes have gone out the window," said John Kilduff, partner at Again Capital in New York.

"There were concerns around the market about the demand outlook, especially as it relates to China, and then if we were going to lose the monetary support from the Fed, it was sort of a one-two punch," Kilduff added.

Chinese state-owned refiner Sinopec (OTC:SHIIY) said in its annual energy outlook on Thursday that China's oil consumption would peak by 2027, as demand for diesel and gasoline weakens.