Oil prices retreated on Tuesday, relinquishing the gains from the previous day, as a weaker demand outlook overshadowed US supply disruptions caused by Tropical Storm Francine and ongoing global oil oversupply concerns. Brent crude futures slipped by 95 cents, or 1.3%, to $70.89 a barrel as of 1214 GMT, while US West Texas Intermediate crude declined by 96 cents, or 1.4%, to $67.75. Both benchmarks had experienced a roughly 1% increase on Monday.

The Organisation of the Petroleum Exporting Countries (Opec) reported in its monthly report on Tuesday that global oil demand is expected to rise by 2.03 million barrels per day (bpd) in 2024, a reduction from the previously forecasted growth of 2.11 million bpd. Additionally, Opec revised its 2025 global demand growth estimate downward to 1.74 million bpd from 1.78 million bpd. These diminished global demand prospects and the anticipation of an oil oversupply continued to exert downward pressure on the market.

Data from China on Monday indicated that consumer inflation accelerated in August to its highest level in six months, despite fragile domestic demand and worsening producer price deflation. Although export data released on Tuesday showed that China's exports grew at their fastest pace in nearly 1-1/2 years in August, imports fell short of expectations due to subdued domestic demand. "The message from China is clear and resonates globally," noted PVM Oil analyst Tamas Varga, emphasizing the country's challenges in stimulating spending and boosting sluggish demand.

In response to Tropical Storm Francine, the US Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening. Corpus Christi port remained operational but with restrictions. The tropical storm is projected to intensify significantly and transform into a hurricane on Tuesday, according to the National Hurricane Center (NHC). Exxon Mobil shut down production at its Hoover offshore platform, while Shell suspended drilling operations at two platforms. Chevron also initiated the shutdown of oil and gas production at two of its offshore platforms.

The US Energy Information Administration is scheduled to release its short-term energy outlook, which will include forecasts for the global market and US crude oil output.