NEW YORK, July 16 ------ Oil prices eased as worries about demand in top importer China offset supportive U.S. economic news, OPEC+ supply restraint and ongoing Middle East tensions. Brent futures fell 18 cents, or 0.2%, to settle at $84.85 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 30 cents, or 0.4%, to settle at $81.91. "Chinese data including refinery runs and crude imports are not supportive," said UBS analyst Giovanni Staunovo. "But demand growth elsewhere is still healthy."
China's economy grew much slower than expected in the second quarter as a protracted property downturn and job insecurity knocked the wind out of a fragile recovery, keeping alive expectations Beijing will need to unleash even more stimulus. China's refinery output fell 3.7% in June from a year earlier down for a third month on planned maintenance, while lower processing margins and lackluster fuel demand pushed independent plants to cut output.
In the U.S., the market focused on the assassination attempt on former President Donald Trump, which some say could boost his re-election chances. Federal Reserve Chair Jerome Powell said inflation readings for the second quarter do "add somewhat to confidence" that the pace of price increases is returning to the U.S. central bank's target in a sustainable fashion, remarks that suggest a turn to interest rate cuts may not be far off.
The Fed hiked rates aggressively in 2022 and 2023 to tame a surge in inflation. Borrowing costs rose for consumers and businesses, slowing economic growth and reducing demand for oil. Lower interest rates could boost oil demand. Markets are pricing in a 94.4% chance of the Fed cutting rates by at least 25 basis points in September, CME's FedWatch Tool showed, after last week's news that June consumer prices fell on a monthly basis for the first time in four years.
Source: reuters.com
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