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Brent futures were down 70 cents, or 0.82%, to $84.15 a barrel
by 1040 GMT, while U.S. West Texas Intermediate (WTI) crude fell
76 cents, or 0.93%, to $81.15.
The weaker Chinese economic data "cast some doubts on whether
market participants are being overly optimistic" regarding
China's oil demand outlook, IG market strategist Yeap Jun Rong
wrote in an email.
The world's second-largest economy grew 4.7% in April-June,
official data showed, its slowest rate since the first quarter
of 2023 and missing a 5.1% forecast in a Reuters poll. It slowed
from the previous quarter's 5.3% expansion, hamstrung by a
protracted property downturn and job insecurity.
"Its 2Q GDP and retail sales figures had surprised on the
downside by a significant margin, while anticipation for
stronger stimulus measures at the Third Plenum may face the risk
of disappointment," Yeap added, referring to a key economic
leadership meeting in Beijing this week.
In the U.S., Fed Chair Jerome Powell said on Monday the three
U.S. inflation readings over the second quarter of this year
"add somewhat to confidence" that the pace of price increases is
returning to the central bank's target in a sustainable fashion,
remarks which market participants interpreted as indicating that
a turn to interest rate cuts may not be far off.
Lower interest rates decrease the cost of borrowing, which can
boost economic activity and oil demand.
Some analysts cautioned about being overly bullish as expected
weakness in some macroeconomic data from the U.S. could still
indirectly hurt oil demand in the near term.
"Macro factors are not in favour of higher oil prices in the
near term (capped below $85/barrel for WTI crude) due to the
prospect of weaker U.S. retail sales for June that are due later
today," OANDA senior market analyst Kelvin Wong wrote in an
email.
(Reporting by Paul Carsten in London, Arathy Somasekhar in
Houston and Trixie Yap in Singapore; editing by Stephen Coates
and Jason Neely)
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