Oil extends losses as demand outlook continues to weaken

Oil prices fell on Tuesday after disappointing economic data from China, the largest crude buyer, revived fears of a global recession.

Brent crude futures fell 73 cents, or 0.8 percent, to $ 94.37 a barrel by 0313 GMT. US West Texas Intermediate crude futures fell 44 cents, or 0.5 percent, to $88.97 a barrel.

Oil futures tumbled about three percent during the previous session.

The Chinese central bank cut interest rates on lending to revive demand after data showed an unexpected economic slowdown in July, with factory and retail activity contracting due to Beijing’s strict policy (zero Covid) and a real estate crisis.

Investors have closely followed talks to revive the 2015 Iran nuclear deal. Analysts said more oil could enter the market if Iran and the United States accepted a European Union proposal to lift sanctions on Iran’s oil exports.

An EU official said Iran responded on Monday to the EU’s “final” draft text to revive the nuclear deal, but did not provide details of Iran’s response. The Iranian foreign minister called on the United States to show flexibility to resolve the three remaining issues.

The US Energy Information Administration said in a report on Monday that total production in the main US shale basins will rise to 9.049 million barrels per day in September, which would be the highest level since March 2020.

The market is also awaiting industry data on US crude inventories due later on Tuesday. A preliminary poll conducted by Reuters on Monday showed that oil and gasoline stocks likely fell last week, while distillate stocks rose.