Oil prices fell in volatile trading today, Tuesday, as the impact of the rise of the US dollar and economic uncertainty outweighed the impact of setting a ceiling on Russian oil prices and expectations of increased demand in China.

Brent crude futures fell 1.09% to $81.78 a barrel by 10:55 UTC, and West Texas Intermediate crude fell 1.03% to $76.14.

Earlier in the session, both contracts fell by more than a dollar, while Brent had gained more than a dollar in Asian trading.

Yesterday, oil futures recorded their largest daily decline in two weeks, after US services sector data indicated the strength of the country's economy.

Oil futures recorded their largest daily decline on Monday (Shutterstock)

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The data reinforced the belief among investors that the Federal Reserve may continue for a longer period of time to adopt sharp increases in interest rates, which supported the dollar index today.

A stronger dollar makes oil, in which it is denominated, more expensive for buyers holding other currencies, which reduces demand for it.

More Chinese cities are easing restrictions related to COVID-19, which has fueled optimism about increased demand in the world's largest oil importer.

The market was assessing the impact of production, setting a ceiling at $60 a barrel, on Russian crude by the Group of Seven, the European Union and Australia, which contributed to market volatility.