Oil prices declined more than 1% on Tuesday on worries of a slowing Chinese economy crimping demand and despite a growing consensus the US Federal Reserve could begin cutting its key interest rate as soon as September.
Brent futures were down $1.31, or 1.54%, to $83.54 a barrel at 1317 GMT, while US West Texas Intermediate (WTI) crude was down $1.41, or 1.72%, to $80.50.
The weaker Chinese economic data "cast some doubts on whether market participants are being overly optimistic" regarding China's oil demand outlook, IG market strategist Yeap Jun Rong wrote in an email, Reuters reported.
The world's second-largest economy grew 4.7% in April-June, official data showed, its slowest rate since the first quarter of 2023 and missing a 5.1% forecast in a Reuters poll. It 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 risk of disappointment," Yeap added, referring to a key economic leadership meeting in Beijing this week.
In the US, Fed Chair Jerome Powell said on Monday the three US 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 which market participants interpreted as indicating 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 cautioned about being overly bullish as expected weakness in some macroeconomic data from the US could still indirectly hurt oil demand in the near term.
