Investing.com-- Oil prices fell Tuesday, weighed chiefly by signs of increasing economic weakness in top importer China, which could limit demand in the coming months.
At 08:50 ET (12:50 GMT), Brent oil futures fell 1.7% to $83.44 a barrel, while West Texas Intermediate crude futures fell 1.8% to $79.38 a barrel.
Weak GDP, Trump popularity weigh on China outlook
Sentiment towards top oil importer China soured this week after gross domestic product data showed the country’s economy grew less than expected in the second quarter.
Growth was seen slowing amid weak domestic consumption, a trend that is also expected to weigh on fuel and travel demand in the country.
Import data for June showed China’s crude shipments fell sharply during the month, brewing more concerns over slowing demand.
Worries over the Chinese economy also rose by increased speculation that Donald Trump will win the 2024 U.S. presidential elections, especially after the assassination attempt appeared to have boosted his popularity.
Trump has maintained a largely negative rhetoric towards China. His administration had imposed steep trade tariffs against China, sparking a trade war between Washington and Beijing in the late-2010s.
US retail sales stronger than expected
U.S. retail sales failed to grow in June on a month-on-month basis, data released earlier Tuesday showed.
This indicates the consumers are feeling the strain from elevated interest rates, but this was still a stronger number than the drop 0.3% expected. Additionally, the previous month's release was revised higher to show growth of 0.3% on a monthly basis.
The American Petroleum Institute is set to release its weekly crude inventories data later in the session, with another draw expected given the summer driving season.
Rate cut hopes grow, but dollar resilient
Losses in crude were limited by growing optimism over a September rate cut in the U.S., especially after a slew of comments from Fed head Jerome Powell suggested the U.S. central bank was gaining more confidence in easing inflation.
Lower rates foster increased economic activity, which bodes well for oil demand. Hopes of a soft landing for the U.S. economy, as inflation comes down, also present a stronger outlook for demand.
The dollar dropped in recent weeks amid speculation over rate cuts, benefiting crude prices. But the greenback stemmed its losses on Monday, as markets also saw a Trump presidency as potentially boosting the dollar.
(Ambar Warrick contributed to this article.)