Oil prices fell more than 1% on Tuesday as traders assessed disappointing economic growth data from China.
West Texas Intermediate (CL=F) fell more than 1.5% to trade near $80 a barrel, while Brent crude (BZ=F) fell more than 1% to trade just above $80 a barrel.
“Disappointing support from the Chinese government, weak fuel demand has led many Chinese refineries to cut production and weak economic data continues to flow from China,” Dennis Kistler, senior vice president at BOK Financial, said in a Tuesday note.
China’s economy grew 4.7% in the second quarter, below analysts’ forecasts of 5.1% GDP growth.
Oil prices fell despite optimism that the Federal Reserve will cut interest rates in September, with traders pricing in a 100% chance that the central bank will cut borrowing costs that month, according to CME FedWatch data.
On Monday, Fed Chairman Jerome Powell gave a fresh signal that the central bank could be closer to cutting interest rates, citing recent improving inflation readings.
The U.S. dollar also strengthened against a basket of currencies (DX-Y.NYB) on Tuesday, sending U.S.-denominated crude oil futures higher.
Oil prices hovered near two-month highs in early July due to supply threats from Hurricane Beryl and continuing tensions in the Middle East.
Concerns over a broader border conflict in the Middle East involving oil-producing Iran have some analysts expecting Brent crude to hit $90 this year. Rising tensions between Israel and the Iran-backed Lebanese Hezbollah militia have raised concerns that a border conflict could eventually involve Tehran more directly.
Since the start of the year, WTI has risen about 13% and Brent has risen more than 10%.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X. Follow.
