Investing.com– Oil prices settled lower Tuesday, as economic weakness in top importer China soured the outlook for global energy at a time when many hoping for summer-led demand slump in inventories.
At 14:30 ET (18:30 GMT), fell 1.3% to $93.73 a barrel, while fell 1.4% to $80.76 a barrel.
Weak GDP, Trump popularity weigh on China outlook
Sentiment towards top oil importer China soured this week after 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.
Fresh domestic inventory data eyed for signs improving summer demand
The recent weakness in crude comes just ahead of fresh inventory crude data from later in the session, and the Energy Information Administration’s weekly report due Wednesday.
inventories fell by a staggering 12 million barrels in the week ended Jul. 5, marking the largest one-week drawdown in 11 months, and reviving hopes that traditional summer demand will lead to cut in global supplies.
“U.S. crude oil demand has improved after a soft start to the 2024 summer driving season, helping push crude oil prices higher,” Wells Fargo said in a recent note.
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 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.
(Peter Nurse, Ambar Warrick contributed to this article.)