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Oil prices fell on Tuesday, paring some gains from the previous session as the market feared more aggressive interest rate hikes from central banks could lead to a global economic slowdown and dampen demand for fuel.
Brent crude futures for October settlement fell 56 cents, or 0.5%, to $104.53 a barrel at 0620 GMT, after climbing 4.1% on Monday, the biggest gain in over a month. The October contract expires on Wednesday and the more active November contract was at $102.57, down 0.4%.
U.S. West Texas Intermediate crude was at $96.86 a barrel, down 14 cents, or 0.1%, after rising 4.2% in the previous session.
Inflation is near double-digit territory in many of the world’s largest economies, a level not seen in nearly half a century, which could prompt central banks in the United States and Europe resort to more aggressive interest rate hikes.
Also weighing on prices, Russia’s oil production has exceeded expectations following the war in Ukraine, the head of the International Energy Agency (IEA) said on Monday.
IEA member countries could release more oil from strategic petroleum reserves (SPRs) if they deem it necessary when the current program expires, the agency chief also said.
The tight supply also provides some price support. Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) top producer, last week raised the possibility of production cuts, which sources said could coincide with an increase in the supply of the Iran if it makes a nuclear deal with the West.
OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on September 5.
The American Petroleum Institute, an industry group, is due to release data on U.S. crude oil inventories on Tuesday. The Energy Information Administration, the statistical arm of the US Department of Energy, will follow on Wednesday.
U.S. crude oil inventories likely fell by 600,000 barrels, with distillate and gasoline inventories also falling, a preliminary Reuters poll showed on Monday.