HOUSTON: Oil prices fell on Tuesday, retreating from strong gains of the previous two sessions due to lackluster Chinese import data and worries about U.S. economic growth, banking sector turmoil and debt-ceiling negotiations.

Brent crude was down 86 cents, or 1.1%, at $76.10 a barrel by 11:06 a.m. ET. U.S. West Texas Intermediate (WTI) crude fell 83 cents, or 1.1%, $72.34.

“We have seen weaker-than-expected demand in China… and if you were to layer on to that the fears that Congress won’t act to resolve the debt ceiling, combined with a regional banking crisis, it leads to additional fears of an economic slowdown,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

On Monday, both benchmarks rose more than 2% on hopes the U.S., the world’s biggest oil consumer, could avoid a harsh recession and as some traders viewed crude’s three-week slide as overdone.

But data on Tuesday showed China’s imports contracted sharply in April, while exports rose at a slower pace, further signs of feeble domestic demand that heaped pressure on an economy struggling in the face of cooling global growth.

Oil climbs over 2% as recession fears begin to fade

“Crude looks to be range bound between $70 and $82 until we see clarification that Asian demand is intact,” said Dennis Kissler, senior vice president of trading at BOK Financial.

Markets were watching U.S. President Joe Biden and top Republican lawmakers’ comments on raising the $31.4 trillion U.S. debt ceiling, fearing an unprecedented default if Congress does not act in three weeks.

U.S. consumer price index (CPI) figures for April are due on Wednesday and could determine the Federal Reserve’s next interest rate decision. The Fed raised interest rates last week and dropped guidance about the need for future hikes.

Last month, U.S. consumers said they expected slightly lower inflation in a year’s time, a report from the New York Federal Reserve showed on Monday.

“The market is cautious today ahead of the inflation data … With net long positions declining sharply over the last two weeks, a lot of traders are already out of the market, so volumes are low.” said Suvro Sarkar, lead energy analyst at DBS Bank.

Also supporting prices, wildfires prompted oil producers in the Canadian province of Alberta to shut in at least 280,000 barrels of oil equivalent per day, more than 3% of Canada’s output.

Bank of America lowered its average Brent price forecast to $80 a barrel for 2023 from $88, citing negative macro trends, tighter credit conditions and higher interest rates that could pressure demand.