Oil fell 2% on Tuesdayafter two sessions of gains, as growing concerns about an economic slowdown and a strengthening dollar outweighed hopes for stronger Chinese demand and declining US crude inventories.
The referential Brent fell $1.96, or 2.4%, to $80.77 a barrel, while US crude West Texas Intermediate it lost $1.69, or 2.2%, to $77.07. Both contracts had risen more than 1% on Monday.
US consumer confidence fell to its lowest level in nine months in April, deepening fears of a recession, a day after regional lender First Republic reported a deposit run of more than $100 billion.
“It looked like oil prices were going to pick up before the old banking fears resurfaced,” said Phil Flynn, an analyst at Price Futures Group.
The dollar rose on growing concerns about corporate profits and the global economy. A stronger dollar pressures demand for oil by making the commodity more expensive for buyers holding other currencies.
Investors remain wary that interest rate hikes by inflation-fighting central banks will slow economic growth and dampen energy demand in the United States, Britain and the European Union.
The US Federal Reserve, the Bank of England and the European Central Bank are expected to raise rates at their upcoming meetings. The Fed meets on May 2 and 3.
Oil traders are also concerned that weak refining margins could force refiners to curb crude purchases.
Earlier in the session, oil prices rose, supported by optimism that holiday travel in China would boost fuel demand and expectations of a drop in US crude inventories.
