Brent futures closed down $1.12, or 1.3%, at $83.73 a barrel, while U.S. West Texas Intermediate crude dropped $1.15, or 1.4%, to $80.76
Oil prices settled more than 1% lower on Tuesday, the third consecutive day of losses, on concerns over a slowing Chinese economy lowering demand, though declines were stemmed by a growing consensus the U.S. Federal Reserve could start lowering its key interest rate as soon as September.
Brent futures closed down $1.12, or 1.3%, at $83.73 a barrel, while U.S. West Texas Intermediate crude dropped $1.15, or 1.4%, to $80.76.
Weaker economic data continues to flow from China as continued government support programs have been disappointing, with many of China’s refineries cutting back on weaker fuel demand, according to Dennis Kissler, senior VP of trading at BOK Financial.
The world’s second-biggest economy grew 4.7% in April-June, according to official data, its slowest rate since the first quarter of 2023 and missing a 5.1% forecast in a Reuters poll.
Meanwhile, the global economy is set for modest growth over the next two years amid cooling activity in the U.S., a bottoming-out in Europe and stronger consumption and exports for China, but risks to the path abound, the IMF said on Tuesday.
In the U.S., crude oil inventories dropped by 4.4 million barrels last week, as per market sources citing API figures on Tuesday. Stocks on average were expected to drop by 33,000 barrels last week, as per a Reuters poll on Tuesday.
Government data on inventories is expected on Wednesday.
Fed Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter of this year “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion. Market participants interpreted the comments as suggesting that a turn to interest rate cuts may not be far off.
