Despite Beijing's unexpected cut in interest rates, crude oil prices fell on Tuesday as bad economic data raised new questions about China's economic resurgence. This occurred despite the fact that Beijing had lowered interest rates.

Futures contracts for US crude oil were trading 1.4% lower at $81.38 per barrel as of 13:40 GMT (9:40 ET), while futures contracts for Brent were trading 1% lower at $85.34 per barrel.

The decline in China's interest rate has not led to an improvement in morale.

China's industrial output and retail sales numbers, which were released late on Monday, indicated that the world's second-largest economy and major oil importer slowed further last month. These statistics were added to a flood of data suggesting mounting pressure on the economy, especially from the housing industry.

The People's Bank of China responded to indications of a faltering recovery from the impact of COVID on Tuesday by marginally decreasing key interest rates. This was done in response to the COVID impact.

However, the move by China's central bank to cut key interest rates for the second time in three months has done nothing to restore general confidence. The reduction in the benchmark interest rate for the one-year medium-term lending facility was only 15 basis points, bringing it down from 2.65% to 2.50%.

The rise in retail sales in the United States is a positive trend.

In contrast, retail sales in the United States climbed by 0.7% in the month of August, which was a greater gain than was anticipated in July. This suggests that the economy in the United States continued to prosper early in the third quarter, averting a recession.

In addition, the numbers for June were adjusted higher to reflect an increase in sales of 0.3% rather than the previously reported increase of 0.2%.

The Federal Reserve increased the benchmark interest rate by 25 basis points in August and indicated that further increases are likely to come in September. These high statistics may only increase the possibilities of officials asking for another interest rate rise, which may have the ability to damage economic activity and, as a result, petroleum demand. While it is widely anticipated that the US Federal Reserve will pause monetary policy the next month, this high data may only increase the possibilities of officials asking for another interest rate hike.

The strength of the dollar is having an effect on the price of crude.

The dollar index reached its highest level in over one and a half months as of late Monday, helped in no little part by these indications of relative economic progress in the United States.

This is having a negative impact on the oil markets since a stronger dollar causes an increase in the price of items priced in the greenback, such as petroleum, which may result in a decrease in demand from consumers in other countries.

The price of crude is quite close to its recent highs.

In spite of this, oil prices continue to hover near their recent highs as a result of production reductions made by Saudi Arabia and Russia, both of which are members of the OPEC+ group, which is formed of the Organization of the Petroleum Exporting Countries and its allies. These reductions have helped to propel prices upward over the last seven weeks.

WTI crude, which is traded in New York, reached a 9-month high on Thursday and has increased by 20% in the previous seven weeks. Meanwhile, Brent crude has increased by 18% in the space of less than two months.

This small correction should not come as a surprise; investors may sometimes go back to making tiny transactions. "The fundamental backdrop remains favorable for buyers who gain a foothold in the supply shortage in the second half of 2023," said RoboForex trader Andrey Goilov. "The fundamental backdrop remains favorable for buyers."

According to the calculations of the IEA, the world demand for crude oil reached a new all-time high of 103 million barrels per day in the month of June. It's possible that we’ll see a new peak in August.

The American Petroleum Institute will offer statistics on the United States' inventory later on in the day as a precursor to the official inventory data that will be released by the United States Energy Information Administration on Wednesday.

The American Petroleum Institute (API) reported a surge in US oil stocks of little more than 4 million barrels the previous week.