Oil prices fell further on Tuesday as Chinese economic data renewed demand concerns, while investors remained cautious ahead of the U.S. Federal Reserve's interest rate decision.

U.S. West Texas Intermediate crude was down 11 cents at $70.60 a barrel by 0409 GMT, while Brent crude was down 6 cents at $73.85 a barrel.

Prices were "weighed down by profit-taking after last week's 6% rally and a batch of disappointing Chinese economic data yesterday," said IG market analyst Tony Sycamore.

Prices fell from multi-week highs on Monday on unexpectedly weak consumer spending data from China, despite strength in industrial output, and as investors moved into a holding pattern ahead of the Fed meeting.

The Fed holds its final policy meeting of the year on Tuesday and Wednesday, when it is widely expected to cut interest rates by a quarter percentage point.

The meeting will also shed light on how far officials think they will cut interest rates in 2025 and 2026, and whether the central bank will scale back easing in anticipation of higher inflation under the incoming Trump administration.

"The 25 basis point cut has been priced in by the market, so any surprises (from the Fed meeting) could move the market," said Anh Pham, an analyst at LSEG.

Lower interest rates could boost economic growth and oil demand.

The oil outlook for next year is clouded by rising supply from non-OPEC+ countries such as the U.S. and Brazil and slowing demand, especially in China.

The International Energy Agency said in its monthly report last week that even if the OPEC+ producer group maintains its output cuts, there will be a supply glut of 950,000 barrels per day next year — nearly 1% of global supply.

On Monday, the European Commission announced a 15th package of EU sanctions against Russia over its invasion of Ukraine, including tougher measures against Chinese entities and more vessels from Moscow's so-called "shadow fleet" that are not regulated or insured by conventional Western providers.

A group of Western countries will begin checking the insurance documents of Russia's shadow fleet in the English Channel, the Danish Straits, the Gulf of Finland and the strait between Sweden and Denmark.

The new EU sanctions are unlikely to translate into "real" disruptions because most flows now do not use Western services, so will not be disrupted, LSEG's Pham said.
Source: Investing.com