Oil declines as inflation expected to impact fuel demand

Oil prices declined on Tuesday, paring some gains from the previous session. The market feared that more aggressive interest rates increases from central banks may lead to a global economic slowdown and soften fuel demand.

Brent crude futures for October settlement decreased $3.58, or 3.4 percent to $101.55 a barrel, after rising 4.1 percent on Monday, the biggest increase in more than a month.

The October contract expires on Wednesday and the more active November contract was at $101.01, decreased 1.9 percent.

U.S. West Texas Intermediate crude was at $94.34 a barrel, decreased $2.67, or 2.8 percent following a 4.2 percent rise in the previous session.

“Risk appetite has cooled over an anticipation that the Federal Reserve would continue to increase interest rates … A pull-back of natural gas prices in Europe also adds uncertainties to the picture of energy crisis,” analysts from Haitong Futures said.

“As a major oil exporter with an output of over 4 million barrels per day, (Iraq’s) domestic situation has no less impact on oil prices than Iran,” Haitong’s analysts said.