By Scott DiSavino
NEW YORK (Reuters) -Oil prices eased about 1% to a one-week low on Tuesday on demand worries following the release of negative economic news from Germany and China, while investors remained cautious ahead of a U.S. Federal Reserve decision on interest rates.
Brent futures fell 72 cents, or 1.0%, to settle at $73.19 a barrel, while U.S. West Texas Intermediate crude slipped 63 cents, or 0.9%, to settle at $70.08.
That was the lowest close for Brent since Dec. 10 and cut the premium of Brent over WTI to a 12-week low of $3.54 a barrel, based on the February contracts.
Analysts have said when Brent's premium over WTI falls below $4 a barrel, it does not make as much economic sense for energy firms to send ships to pick up U.S. crude, which should result in lower U.S. exports.
In China, the world's second-biggest economy, industrial output growth quickened slightly in November, while retail sales disappointed, keeping alive calls for Beijing to ramp up consumer-focused stimulus as policymakers brace for more U.S. trade tariffs once President-elect Donald Trump takes office for a second time.
In Germany, business morale worsened more than expected in December, according to a survey by the Ifo Institute, weighed down by companies' pessimistic assessment of the coming months amid geopolitical uncertainty and an industrial slump in Europe's largest economy.
"The only good thing about Germany's just-released Ifo index is that it is the final major macro indicator released this year. Time to ... end a year that will go down as the second consecutive year of economic stagnation," analysts at ING, a bank, said in a note.
In the world's biggest economy, meanwhile, U.S. retail sales increased more than expected in November amid an acceleration in motor vehicle and online purchases.
The report from the U.S. Commerce Department had no impact on expectations that the Fed would cut interest rates on Wednesday for the third time since the U.S. central bank initiated its policy easing cycle.
Investors, however, will watch U.S. policymakers' forecasts for signals on whether the Fed will be more cautious in 2025, as economic indicators, such as the retail sales data, point to continued resilience and inflation remains persistent.
After hiking rates aggressively in 2022 and 2023 to tame a surge in inflation, the Fed started to lower rates in September.
Lower rates decrease borrowing costs, which can boost economic growth and demand for oil.
OIL SUPPLIES AND INVENTORIES
In the U.S., oil storage data is due from the American Petroleum Institute trade group later on Tuesday and the U.S. Energy Information Administration on Wednesday.