Oil up on expected US oil stock drawdown, but China gloom tempers gain

Brent crude oil price news: Oil prices were up in early trade on Tuesday ahead of data later expected to show a draw in U.S. crude oil and gasoline inventories, though persistent concerns over a slowdown in China's economy limited the upside. Brent crude was up 10 cents at $84.56 a barrel and U.S. West Texas Intermediate crude was trading 9 cents higher at $80.81 a barrel at 0101 GMT. WTI's contract with September expiry was up 11 cents at $80.23 a barrel.

U.S. crude oil and gasoline inventories were expected to have fallen last week, a preliminary Reuters poll showed, as the American Petroleum Institute industry group is due to release data later on Tuesday. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due to release its own data on Wednesday. The market is also focusing on preliminary U.S. August PMI data and the Federal Reserve's annual economic symposium at Jackson Hole both due later this week, ANZ Research said in a note.

U.S. economic data over recent weeks has bolstered expectations for the Fed to keep rates higher for longer, putting a dampener on the demand outlook for oil and a broad range of consumer goods. Moreover, gloom over the economic outlook in China, the world's second-biggest oil consumer, has also pressured oil prices. Brent and U.S. crude oil ended on Monday at a loss, after China's central bank cut its one-year lending rate only moderately to the disappointment of the market which had expected more aggressive stimulus steps amid a rapid loss in economic momentum.

"China's economic weakness is weighing on oil prices and will create a ceiling for them this year, especially as Beijing appears committed to avoiding large-scale fiscal stimulus," Eurasia Group said in a note.

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