Daily Times

Oil prices slipped on Tuesday on worries about a slowing Chinese economy crimping demand, though a growing consensus that the U.S. Federal Reserve will begin cutting its key interest rate as soon as September limited declines.

Brent futures fell 57 cents, or 0.67%, to $84.28 a barrel by 0630 GMT, while U.S. West Texas Intermediate (WTI) crude dropped 59 cents, or 0.72%, to $81.32.

IG market strategist Yeap Jun Rong, in an email, said the weaker run in Chinese economic data “cast some doubts on whether market participants are being overly optimistic around Chinese oil demand outlook”.

The world’s second-largest economy grew 4.7% in April-June, official data showed, its slowest since the first quarter of 2023 and missing a 5.1% forecast in a Reuters poll. It also slowed from the previous quarter’s 5.3% expansion, hamstrung by a protracted 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 risks of disappointment,” Yeap added, 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 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, remarks market participants interpreted as indicating that a turn to interest rate cuts may not be far off.