Oil prices fell more than 1% on Tuesday as traders assessed disappointing growth data out of China.
West Texas Intermediate (CL=F) hovered near $80 per barrel while Brent (BZ=F) traded just above $83 per barrel during the session.
"Weaker economic data continues to flow from China as continued Gov’t support programs have been disappointing with many of China’s refineries cutting back on weaker fuel demand," Dennis Kissler, senior vice president at BOK Financial, said in a note on Tuesday.
The Chinese economy grew 4.7% during the second quarter, missing analyst projections of 5.1% GDP growth.
Oil's price decline comes despite optimism over rate cuts by the Federal Reserve in September. Traders have priced in a 100% likelihood the Fed will bring down borrowing costs that month, according to CME FedWatch data.
On Monday Fed Chair Jerome Powell gave another signal that the central bank could be closer to cutting rates, citing a recent turnaround in inflation readings.
The US dollar against a basket of currencies (DX-Y.NYB) also strengthened on Tuesday, making crude futures priced in the currency more expensive.
Oil rose to hover near a two-month high in early July amid threats to supply from Hurricane Beryl and ongoing tensions in the Middle East.
Some analysts predict $90 Brent this year given concerns of a broader cross-border conflict in the Middle East involving Iran, an oil-producing country. Escalating tensions between Israel and Lebanon's Hezbollah militia backed by Iran have raised concerns that a cross-border conflict could eventually involve Tehran more directly.
Year to date WTI is up roughly 13% while Brent is up more than 10%.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.