Brent crude was down 29 cents at $84.17 a barrel by 1014 GMT, while the more active U.S. West Texas Intermediate October contract slipped 22 cents to $79.90 a barrel.
The front-month WTI contract that expires shortly was down 4 cents at $80.68 a barrel on a very limited volume of trades.
China, the world’s second-largest economy, is seen as key to shoring up oil demand over the rest of the year.
But the country’s sluggish economic activity has frustrated markets after a post-COVID reopening boost, while authorities’ pledges to aid recovery have so far fallen short of expectations, including a smaller-than-expected cut in a key lending benchmark on Monday.
“China’s economic weakness … will create a ceiling for them this year, especially as Beijing appears committed to avoiding large-scale fiscal stimulus,” Eurasia Group said in a note.
Amplifying demand concerns is the possibility of another rate hike in the United States, the world’s biggest oil consumer, which central bank officials have not ruled out given persistent inflation.
Meanwhile, the U.S. is expected to continue to draw down stocks. A preliminary Reuters poll showed crude oil and gasoline inventories were expected to have fallen last week, with data from American Petroleum Institute due later on Tuesday.
An easing of supply may be on the cards. Iraq’s oil minister was expected to discuss a possible resumption of oil exports with his Turkish counterpart, a source told Reuters on Monday.
The ministers discussed oil and energy relations in Ankara, a statement from the Iraqi oil ministry said on Tuesday, but it did not say whether a resumption of exports via the Ceyhan oil terminal was discussed.
Turkey halted Iraq’s 450,000 barrels per day (bpd) of exports – roughly 0.5% of global supply – through the northern Iraq-Turkey pipeline in March after an International Chamber of Commerce arbitration ruling.
But investors are more concerned with China and U.S. rate hikes than the Iraq-Turkey talks, said Naeem Aslam of Zaye Capital Markets. They “don’t represent an immediate threat in terms of supply – there’s positive news, prices are down on the day but for other reasons, not Iraq.”
Separately on Monday, Shell said it was investigating a possible leak in the 180,000 bpd Trans Niger oil pipeline.
Reporting by Natalie Grover and Paul Carsten in London, Muyu Xu in Singapore and Katya Golubkova in Tokyo; Editing by Himani Sarkar, Tomasz Janowski and David Evans
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