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Oil prices declined for the third straight day as general risk-off sentiment combined with traders anxiety over Chinese demand to pull WTI down near two-month lows.

"Questionable data coming out of China is the main driver in the overall retraction" for oil, Gary Cunningham, director of market research at Tradition Energy, told MarketWatch.

China's "petroleum demands may not be as robust as we thought just a few weeks ago."

Meanwhile, U.S. summer travel demands remain a "bright spot, but are not enough to support the entire market as political risks due to escalating tensions in the Mideast are also easing," said Cunningham.

API

• Crude -4.495mm (-3.9mm exp)

• Cushing -929k

• Gasoline -1.917mm (-1.6mm exp)

• Distillates -322k

API reports that crude inventories tumbled for the 5th straight week. All cohorts saw drawdowns last week...

Source: Bloomberg

WTI traded modestly higher on the API report, well off the day's lows (which tested two-month lows)...

Traders are also looking to an OPEC+ meeting of the Joint Ministerial Monitoring Committee via videoconference, expected Thursday. The panel conducts a review of the oil markets every two months and has the authority to call for a full OPEC+ meeting if it decides one is needed.

"No changes to output policy are expected," said Lukman Otunuga, manager for market analysis at FXTM, so the focus will be on the Federal Reserve decision on Wednesday and the monthly U.S. jobs report on Friday.

"These key risk events may provide insight into when U.S. [interest] rates will be cut this year, influencing oil as a result," as lower rates could stimulate economic growth, supporting oil demand, said Otunuga. Lower rates may result in a weaker dollar, boosting oil, which is priced in dollars, he said.

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