Oil prices slumped on Tuesday amid worries over demand and concerns of further monetary tightening.
Brent, the benchmark for two thirds of the world’s oil, was 2.44 per cent lower at $84.08 a barrel at 9.46pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 2.83 per cent at $78.18 a barrel.
Crude futures closed higher on Monday after falling by about 2 per cent earlier in the session as China set a lower-than-expected economic growth target for 2023.
Brent settled up 0.4 per cent at $86.18 a barrel while WTI was up 1 per cent at $80.46.
“Traders were clearly not deterred by China's modest growth target for long,” said Craig Erlam, senior market analyst at Oanda.
“Against that backdrop, it may well be the case that Brent and WTI are about to test the upper end of their trading ranges that they've remained within since early December.”
US Federal Reserve chairman Jerome Powell is set to appear before Congress in a key meeting on Tuesday.
This will be followed on Wednesday with a session before the House Financial Services Committee, which oversees America's financial services industry.
“Today, all eyes and all ears are on the Fed chair and what he thinks about the latest set of economic data,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Since the latest FOMC [Federal Open Market Committee] meeting, we saw a blowout NFP [non-farm payrolls] number, an uptick in inflation figures, lower-than-expected decline in the S&P 500 earnings and overall encouraging economic activity data,” said Ms Ozkardeskaya.
Minutes released by the Fed last month showed that policymakers expect continuing interest rate increases to bring inflation back down to their long-term goal of 2 per cent.
Most officials agreed to reduce the pace of rate increases to 25 basis points but a few recommended an increase of 50 bps to bring the Fed Funds rate to a level they consider “sufficiently restrictive”.
Last month’s US economic data pointed to stubborn inflation in the world’s largest economy, making a case for larger interest rate raises.
After its February meeting, the Fed raised interest rates by 25 bps — the eighth increase since March 2022. The Fed's next meeting is scheduled for March 21 to March 22.
Brent gained 3.6 per cent last week on positive economic data from China, which has been gradually reopening its economy after following a zero-Covid policy for about three years.
Despite the recent price rally, Fitch Solutions has reduced its 2023 Brent forecast to $90 a barrel from $95, citing “weaker-than-expected” price performance.
The rating agency also lowered its next year’s Brent estimate by $5 to $83 a barrel.
The International Energy Agency expects global oil demand to surge to record levels this year, driven by China’s economic recovery.
Demand is projected to rise by two million barrels per day to 101.9 million bpd in 2023, the Paris-based agency said in its February oil market report. It previously forecast a growth of 1.9 million bpd.
