Oil prices slip on persistent concerns over Chinese demand
Oil prices slipped on Tuesday onworries about a slowing Chinese economy crimping demand, though a growingconsensus that the US Federal Reserve will begin cutting its key interest rateas soon as September limited declines.
Brent futures fell 21 cents, or0.25%, to $84.64 a barrel by 0408 GMT, while US West Texas Intermediate (WTI)crude dropped 25 cents, or 0.31%, to $81.66.
IG market strategist Yeap Jun Rongsaid in an email the weaker run in Chinese economic data "cast some doubtson whether market participants are being overly optimistic around Chinese oildemand outlook".
The world's second-largest economygrew 4.7% in April-June, official data showed, its slowest since the firstquarter of 2023 and missing a 5.1% forecast in a Reuters poll. It also slowedfrom the previous quarter's 5.3% expansion, hamstrung by a protracted propertydownturn and job insecurity.
"Its 2Q GDP and retail salesfigures had surprised on the downside by a significant margin, whileanticipation for stronger stimulus measures at the Third Plenum may face therisks of disappointment," Yeap added, referring to a key economic leadershipmeeting in Beijing this week.
In the US, Fed Chair Jerome Powellsaid on Monday the three US inflation readings over the second quarter of thisyear "add somewhat to confidence" that the pace of price increases isreturning to the central bank's target in a sustainable fashion, remarks marketparticipants interpreted as indicating a turn to interest rate cuts may not befar off.
Lower interest rates decrease thecost of borrowing, which can boost economic activity and oil demand.
Key US economic data has started toshow signs of softness, which could quicken the Fed's decision on monetarypolicy easing, with cuts likely in September and December, according to CMEFedWatch Tool, said OANDA senior market analyst Kelvin Wong in a client note.
On the supply side, Houthi fightersin Yemen - responding to Israel's bombardment of Gaza - targeted three vessels,including an oil tanker, in the Red and Mediterranean seas with ballisticmissiles, drones and booby-trapped boats, they said on Monday.
While crisis in the Middle East hasnot impacted supply, attacks on ships in the Red Sea has forced vessels to takelonger routes, meaning oil remains on the water for longer.
(Reuters)
