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Oil prices fell over 1% on Tuesday on sluggish Chinese economic data coupled with fears that Beijing’s unexpected cut in key policy rates was not sufficiently substantial to rejuvenate the country’s sputtering post-pandemic recovery.

Brent crude futures fell $1.32, or 1.5%, to settle at $84.89 a barrel, while U.S. West Texas Intermediate crude dropped $1.52, or 1.8% to $80.99.

Supply cuts by Saudi Arabia and Russia, part of the OPEC+ group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies, have helped to galvanize a rally in prices over the past seven weeks.

Both U.S. crude futures and Brent have fallen for two consecutive sessions as the oil market takes a breath, said Andrew Lipow, president at Lipow Oil Associates in Houston.

Weighing on sentiment, China’s industrial output and retail sales data on Tuesday showed the economy slowed further last month, intensifying pressure on already faltering growth and prompting authorities to cut key policy rates to bolster economic activity.

When the oil market appears to be comfortable, it is often the case that China is the number one fire douser, throwing a wet blanket over those dreaming of prices north of $90, said John Evans of oil broker PVM. China is the world’s biggest oil importer.

China’s central bank lowered interest rates marginally after the data that highlighted intensifying pressure on the economy, mainly from the property sector, though analysts say the cut was too small to make a meaningful difference.

There are concerns China could struggle to meet its growth target of about 5% for the year without more fiscal stimulus.

On Tuesday Barclays cut its forecast for China’s 2023 growth in gross domestic product to 4.5%, citing a faster than expected deterioration in the housing market.

Also adding to risk-off sentiment, an analyst at Fitch Ratings warned that U.S. banks, including JPMorgan Chase, could be downgraded if the agency further cuts its assessment of the operating environment for the industry, according to a report from CNBC on Tuesday.

“When the banking sector is shaky, oil gets shakier because it is so sensitive to interest rates, loans and the general health of the economy,” said Phil Flynn, an analyst at Price Futures Group.

On a brighter note, refinery throughput in China rose in July 17.4% from a year earlier as refiners kept output elevated to meet demand for domestic summer travel and to cash in on high regional profit margins by exporting fuel.

Investors are now awaiting data on U.S. crude inventories. Seven analysts polled by Reuters estimated on average that crude inventories fell by about 2.3 million barrels in the week to Aug. 11. [EIA/S]

The industry report is due later on Tuesday, and U.S. government data is due on Wednesday.

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