Investing.com– Oil prices steadied Monday settled lower as underwhelming growth data from China knocked back optimism on the outlook for demand, but downside momentum was kept in check by ongoing expectations for a U.S. rate cut in September.
At 14:30 ET (18:30 GMT), dropped 0.4% to settle at $81.91 barrel, the slipped 0.2% to $84.85 a barrel.
Fed September rate cuts firm after Powell’s remarks
Federal Reserve Chairman Jerome Powell said Monday that recent inflation readings had boosted the Fed’s confidence on bringing down inflation, suggesting the central bank is moving closer to rate cuts.
“What increases that confidence in that is more good inflation data, and lately here we have been getting some of that,” Powell said at the Economic Club of Washington D.C.
About 88% of traders expect a rate cut in September, up from 73% a week earlier, according to Investing.com’s
Chinese GDP underwhelms
Concerns over waning oil demand in top importer China were furthered Monday by the release of gross domestic product data showing the economy grew less than expected in the second quarter.
grew 4.7% year-on-year, less than a rise of 5.1% expected and slowing from the 5.3% seen in the prior quarter.
The world’s second-largest economy registered its weakest growth since the first quarter of 2023, with the softer reading largely driven by laggard consumer spending, which slowed in the face of heightened economic uncertainty.
While the country still remained on track to meet its 5% annual GDP target, Monday’s data showed that it faced increased economic headwinds. This could bode poorly for crude demand in the world’s biggest oil importer.
Additionally, China’s imports fell 2.3% in the first half of this year to 11.05 million barrels a day, amid disappointing fuel demand.
“Given that China is expected to make up the majority of oil demand growth this year, it is not surprising signs of weakness in Chinese demand are a concern,” said analysts at ING, in a note.
Focus is now squarely on the Third Plenum of the Chinese Communist Party, set to begin from this week, for more cues on the economy.
The event is a meeting of top Chinese officials, and could potentially yield more stimulus measures to support the economy.
(Peter Nurse, Ambar Warrick contributed to this article.)