Oil falls after downbeat US economic data

Oil prices fell on Tuesday, reversing earlier gains, as US consumer prices unexpectedly rose in August, setting the stage for another big rate hike by the US Federal Reserve next week.

Brent crude fell 62 cents, or 0.7%, to $93.38 a barrel at 1407 GMT, while WTI crude fell 30 cents, or 0.3%, to $87.48 a barrel. The consumer price index rose 0.1% last month after being unchanged in July, the US Labor Department said on Tuesday. Economists polled by Reuters had forecast a 0.1% decline. Fed officials will meet next Tuesday and Wednesday as inflation remains well above the US central bank's 2% target. Renewed COVID-19 restrictions in China, the world's second largest oil consumer, also put pressure on crude oil prices. According to official data, the number of trips made during China's three-day Mid-Autumn Festival holiday declined and tourism revenues also fell as COVID-related restrictions discouraged people from traveling. Both contracts rose more than $1.50 a barrel earlier in the session, supported by concerns about tightening stocks. "The structural outlook for the oil market remains one of tightness, but for now this is being offset by cyclical demand headwinds," Morgan Stanley (NYSE:MS) said in a note. The Strategic Petroleum Reserve (SPR) in the US fell by 8.4 million barrels to 434.1 million barrels in the week ended September 9, the lowest level since October 1984, according to data released by the Energy Department on Monday. US commercial oil stockpiles are expected to fall by about 200,000 barrels in the week to September 9, the fifth straight week of declines, according to a preliminary Reuters poll on Monday. The American Petroleum Institute (API), an industry group, will release its inventory report at 16:30 EDT (2030 GMT) on Tuesday. The US Energy Information Administration (EIA) will release its report at 10:30 a.m. EDT (1430 GMT) on Wednesday. "We remain constructive on oil prices despite growing headwinds to demand as the supply side remains supportive with slower than expected US production growth and a proactive OPEC+," Amarpreet Singh, energy analyst at Barclays (LON:BARC), said in a note. Expectations for a revival of the West's nuclear deal with Iran remained weak. Germany on Monday expressed regret that Tehran had not responded positively to European overtures to revive the 2015 deal. US Secretary of State Antony Blinken said a deal was unlikely in the near term. The Organization of the Petroleum Exporting Countries on Tuesday stuck to its forecasts for global oil demand to grow strongly in 2022 and 2023, citing signs that major economies are doing better than expected despite obstacles such as rising inflation. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!