Oil falls due to the rise in the dollar and fears of the impact of the Russian crude oil price ceiling

Oil prices fell in a volatile market on Tuesday as a strengthening dollar and economic uncertainty offset the upward impact of a price cap on Russian oil and prospects for a demand boost in China.

At 10:55 GMT, crude oil futures Brent were down 90 cents, or 1.09%, to $81.78 a barrel, and the West Texas Intermediate in the United States (WTI) was down 79 cents, or 1.03%, at $76.14.

Earlier in the session, both contracts lost more than $1, while Brent rose more than $1 in Asian trade.

On Monday, crude oil futures posted their biggest daily plunge in two weeks, after data from the US services sector showed the strength of the country’s economy.

The data bolstered investors’ belief that the Federal Reserve could sustain aggressive interest rate hikes for longer, lending support to the dollar index on the session.

A stronger greenback makes dollar-denominated oil more expensive for buyers of other currencies, reducing demand for the commodity.

“Inflation headwinds could continue to cause global economic turbulence in the coming months,” said Tamas Varga of the PVM brokerage, but added that “the gradual opening by the Covid-19 in China It’s a timidly positive development.”

In China, more cities are easing Covid-19-related restrictions, raising hopes for increased demand in the world’s top oil importer. The country is about to announce further easing of some of the world’s toughest restrictions starting Wednesday, according to sources consulted.