WionDrive News Desk 
Oil prices dipped on Tuesday amid concerns over a slowing Chinese economy affecting demand, although growing expectations that the US Federal Reserve may cut interest rates as early as September helped to limit the declines. Brent futures fell by 57 cents, or 0.67%, to USD 84.28 a barrel by 0630 GMT, while US West Texas Intermediate (WTI) crude dropped 59 cents, or 0.72%, to USD 81.32.
IG market strategist Yeap Jun Rong noted that the weaker Chinese economic data raised questions about whether market participants are being too optimistic regarding China’s oil demand outlook. The world’s second-largest economy grew 4.7% in the second quarter, missing a Reuters poll forecast of 5.1% and down from the previous quarter’s growth of 5.3%, largely due to a prolonged property downturn and job insecurity. Yeap mentioned that the disappointing GDP and retail sales figures might dampen expectations for stronger stimulus measures anticipated at this week’s Third Plenary meeting in Beijing.
In the US, Fed Chair Jerome Powell indicated on Monday that recent inflation data added confidence that price increases are returning to the central bank’s target sustainably, which led market participants to believe interest rate cuts could be on the horizon. Lower interest rates typically reduce borrowing costs, potentially boosting economic activity and oil demand. However, some analysts warned against excessive optimism, as expected weaknesses in US macroeconomic data could negatively impact oil demand in the short term. OANDA senior market analyst Kelvin Wong cautioned that macro factors are not supportive of higher oil prices in the near term, suggesting WTI crude may remain capped below USD 85 a barrel due to anticipated weaker retail sales data for June.
