Oil prices fell on Tuesday on concerns about the pace of economic growth in China and a stronger U.S. dollar, handing back some of the gains triggered by an escalation of tensions in the Middle East.
Global benchmark Brent crude prices were down 17 cents at $37.05 a barrel at 1314 GMT. U.S. West Texas Intermediate (WTI) crude slipped 7 cents to $36.69 a barrel.
“It is the Chinese stock market sell-off and the strong dollar that are pressuring oil,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Chinese stock markets fell again on Tuesday after a 7 percent dive on Monday, rattling markets worldwide and prompting action from the central bank and stock market regulator.
Concerns about the economy in China, the world’s second-largest oil consumer, were worsened by news that national rail freight volumes logged their biggest ever annual decline in 2015.
“Last year we talked about supply and demand even surprised on the upside. But with this news flow from China, demand fears have come back,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
The U.S. dollar hit a one-month high against a basket of other currencies, weighing on oil prices as it made holding dollar-denominated commodities more expensive.
The oil market largely shrugged off rising political tensions in the Middle East. On Tuesday, Kuwait recalled its ambassador to Iran following attacks on Saudi missions by Iranian protesters, state news agency KUNA reported.