Brent futures were down 67 cents, or 0.8%, to $84.18 a barrel, while U.S. WTI crude dropped 72 cents, or 0.9%, to $81.19
Oil prices dropped on Tuesday on concerns of a slowing Chinese economy lowering demand and despite a growing consensus the U.S. Fed could begin cutting its key interest rate as soon as September.
Brent futures were down 67 cents, or 0.8%, to $84.18 a barrel by 0811 GMT, while U.S. WTI crude dropped 72 cents, or 0.9%, to $81.19.
The weaker Chinese economic data “cast some doubts on whether market participants are being overly optimistic” regarding China’s oil demand outlook, stated IG market strategist Yeap Jun Rong.
The world’s second-biggest economy grew 4.7% in April-June, official data showed, its slowest rate since the first quarter of 2023. It slowed from the previous quarter’s 5.3% expansion, due to an extended property downturn and job insecurity.
Its 2Q GDP and retail sales figures had surprised on the downside by a significant margin, while anticipation for stronger stimulus measures at the Third Plenum may face the risk of disappointment, Yeap said, referring to a key economic leadership meeting in Beijing this week.
In the U.S., Fed Chair Jerome Powell said on Monday the three U.S. inflation figures 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, remarks which market participants interpreted as suggesting that a turn to interest rate cuts may not be far off.
Lower interest rates decrease the cost of borrowing, which can boost economic activity and oil demand.
Some analysts warned being overly bullish as expected weakness in some macroeconomic data from the U.S. could still indirectly hurt oil demand in the near term.