Oil prices slip on China demand woes; fresh US inventory data eyed

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.)

This post is originally published on INVESTING.

  • Related Posts

    Factbox-Here’s what is known about Trump’s executive orders after swearing-in

    (Reuters) -U.S. President Donald Trump on Monday began to issue what is expected to be a flurry of executive orders and directives, as he sought to put his stamp on…

    Trump signals end to new US wind power leasing

    (Reuters) – President Donald Trump on Monday signaled an end to U.S. government support for wind power, saying wind mills are ugly, expensive and harm wildlife. “We’re not going to…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Factbox-Here’s what is known about Trump’s executive orders after swearing-in

    • January 21, 2025
    Factbox-Here’s what is known about Trump’s executive orders after swearing-in

    Trump signals end to new US wind power leasing

    • January 21, 2025
    Trump signals end to new US wind power leasing

    Trump repeals 2023 memo barring Arctic oil drilling in some 16 million acres

    • January 21, 2025
    Trump repeals 2023 memo barring Arctic oil drilling in some 16 million acres

    Trump revokes Biden order that set 50% EV target for 2030

    • January 21, 2025
    Trump revokes Biden order that set 50% EV target for 2030

    Trump says to unleash American fossil fuels, halt climate cooperation

    • January 21, 2025
    Trump says to unleash American fossil fuels, halt climate cooperation

    Dollar under water on signs Trump tariffs to be gradual

    • January 21, 2025
    Dollar under water on signs Trump tariffs to be gradual