Oil prices decline amid concerns over Chinese demand

Oil prices dropped on Tuesday due to concerns about a slowing Chinese economy affecting demand. However, expectations that the U.S. Federal Reserve might start cutting its key interest rate as soon as September helped to limit the decline, News.Az reports citing Reuters.

Brent futures fell 21 cents, or 0.25%, to $84.64 a barrel, while U.S. West Texas Intermediate (WTI) crude decreased by 25 cents, or 0.31%, to $81.66 a barrel.

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.

In the US, 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 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.

News.Az