Investing.com-- Oil prices fell Tuesday, reversing course after last week’s rebound as anticipation of a slew of economic cues this week sparked caution, while OPEC also cut its outlook on 2024 demand growth.
At 09:20 ET (13:20 GMT), West Texas Intermediate crude futures fell 0.9% to $79.36 a barrel, while Brent oil futures expiring in October fell 0.9% to $81.54 a barrel.
Prices had rebounded sharply from over seven-month lows as fears of a worsening conflict between Iran and Israel saw traders attach a greater risk premium to crude.
But overall gains were still held back by persistent concerns over demand, especially following weak economic prints from top importer China, and as traders also fretted over a U.S. recession.
PPI cools more than expected
Oil markets were also awaiting a string of key economic readings this week for more cues on growth and interest rates.
Data released earlier Tuesday showed that U.S. producer prices growth slowed more than expected on an annual basis in July, in the latest sign of cooling inflationary pressures in the world's largest economy.
The producer price index for final demand grew 2.2% annually last month, a fall from a revised 2.7% in June, according to Labor Department data. Economists had called for a fall to 2.3%.
Taking out more volatile items like fuel and food, so-called “core” PPI slowed to a monthly rate of 0.0%, from a revised 0.3% in June, and an annualized pace of 2.4%, from 3.0%.
This report comes a day before the more widely-watched consumer price index, which is expected to show inflation stayed at 3.0% on an annual basis in July, unchanged from June’s figure.
Traders are pricing in either a 25 or 50 basis point rate cut by the Federal Reserve in September, and cooling inflation could lead to a hefty rate cut.
Beyond the inflation data, industrial production and retail sales data from the U.S. is due later in the week.
(Ambar Warrick contributed to this article.)
Industrial production and retail sales readings from China are also due later this week and are set to offer more cues on the world’s biggest crude importer.
OPEC cuts oil demand forecast
The Organization of Petroleum Exporting Countries (OPEC) said it expects oil demand to grow by 2.11 million barrels per day in 2024, down from earlier forecasts for growth of 2.25 million bpd.
In a monthly report released on Monday, the cartel cited increased doubts over China, as the country continued to struggle with a post-COVID economic rebound.
The lower demand forecast raised doubts over just how much scope there was in the OPEC's plans to begin phasing out its production cuts.
The cut ramped up concerns over a slowdown in global oil demand this year, especially amid fears of sluggish demand in China, which is the world’s biggest oil importer.
Monday's demand forecast cut comes just months before the cartel is set to meet and decide on the path of production in the coming months.