Oil prices slip as recession fears rise, tight supply stems losses

Photo: VCG

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 percent, to $111.27 a barrel at 3 a.m. GMT, having jumped 2.4 percent on Friday.

U.S. West Texas Intermediate crude futures for August delivery dropped 34 cents, or 0.3 percent, to $108.09 a barrel, after climbing 2.5 percent on Friday.

"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 U.S. petroleum refinery capacity has improved," CMC Markets analyst Tina Teng said.

"In addition, a strong U.S. dollar also weakens broad commodity markets, including crude prices."

U.S. 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."