Brent, the benchmark for two thirds of the world’s oil, was trading 0.54 per cent lower at $84.00 a barrel at 4.03pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.50 per cent at $80.32 a barrel.
On Monday, Brent settled 0.40 per cent lower at $84.46 a barrel, while WTI fell 0.65 per cent to $80.72.
“Risks to the crude demand outlook are growing, especially after China disappointed with last night’s easing, but for now a tight market should keep oil supported,” said Edward Moya, senior market analyst at Oanda.
“Right now, there are so many oil drivers, and most support higher prices. Heating oil prices are elevated, and that might continue.”
Iraq's Oil Minister Hayan Abdel Ghani is visiting Turkey to discuss several issues, including the resumption of oil exports through the Ceyhan oil terminal, Reuters reported on Monday, citing a source.
About 450,000 barrels of oil was trapped in Iraqi Kurdistan in late March after the International Chamber of Commerce ruled on a long-standing complaint from Baghdad against unilateral exports by the region.
On April 4, a deal was struck between Baghdad and Erbil to allow the federal government to market the oil produced from Iraqi Kurdistan in exchange for monthly budget transfers to the region amounting to 12.67 per cent of Iraq's oil revenue. Baghdad and Ankara had been working to iron out technical hurdles.
“These days, the Chinese demand expectations are very much in focus, which could help the oil bears take advantage for selling the recent rally in oil prices,” she said.
On Monday, the People's Bank of China announced a moderate cut to its one-year benchmark lending rate amid expectations it would take aggressive stimulus measures to revive growth in the world’s second-largest economy.
The one-year loan prime rate was reduced by 10 basis points to 3.45 per cent, while the five-year LPR was left at 4.20 per cent.
China’s economic recovery has lost momentum mainly due to a deepening property slump and weak consumer spending.
Last week, China’s central bank cut key policy rates for the second time in three months as industrial output and retail sales recorded slower growth in July.
Meanwhile, the country has officially fallen into deflation, with both consumer and producer prices declining last month compared with a year prior.
Global oil demand is set to expand by 2.2 million barrels per day this year, with China accounting for more than 70 per cent of that growth, according to the International Energy Agency.
However, growth in crude consumption is expected to slow to 1 million bpd next year as the post-pandemic economic rebound runs out of steam, the IEA said in its monthly oil market report.