Oil Prices Slip as Recession Fears Rumble On, Tight Supply Stems Losses

Oil Prices Slip as Recession Fears Rumble On, Tight Supply Stems Losses

Oil prices fell on Monday, paring gains from the previous session, as fears of a global recession weighed on the market even as supply remains tight amid lower OPEC output, unrest in Libya and sanctions on Russia.

Brent crude futures for September slipped 36 cents, or 0.3%, to $111.27 a barrel at 0300 GMT, having jumped 2.4% on Friday.

US West Texas Intermediate (WTI) crude futures for August delivery dropped 34 cents, or 0.3%, to $108.09 a barrel, after climbing 2.5% on Friday, Reuters reported.

"The recession fears are the primary bearish factor that has capped the surge in oil prices. Rising rates and a plunge in consumer confidence have dented the fuel demand outlook, while data shows that the US petroleum refinery capacity has improved," said CMC Markets analyst Tina Teng.

"In addition, a strong USD also weakens broad commodity markets, including crude prices."

US consumer sentiment dropped to a record low in June despite a marginal improvement in the outlook for inflation, as the Federal Reserve said its commitment to reining in inflation was "unconditional" and increasing concerns of interest rate hikes.

Oil supply concerns still remain, preventing steeper price falls.

"Energy markets remain laden with specific supply risks that makes being short a nervy