NEW YORK: Oil prices fell about 2% on Tuesday on worries that slower economic growth in the US and China could reduce demand for energy, especially after prices surged over 7% during the prior three days.

Brent futures fell $1.88, or 2.3%, to settle at $79.55 a barrel, while US West Texas Intermediate (WTI) crude fell $1.89, or 2.4%, to settle at $75.53.

“Today’s price pullback, although significant, still fell within range of a normal and deserved correction following a substantial three-day $6-per-barrel advance,” analysts at energy advisory firm Ritterbusch and Associates said in a note.

Technical traders noted that prices of both contracts pulled back after failing to break above resistance around the 200-day moving averages on Monday.

With US gasoline futures still trading near a six-month low, the 321-crack spread, which measures refining profit margins, held near its lowest level since February 2021 for a second day in a row.

“If the refiner is not making money on gasoline and distillate, then the refiner is going to buy less crude oil to make gasoline and distillate. The barrels he does not buy will get sent to storage,” Bob Yawger, director of energy futures at Mizuho, said in a note.

In the US, consumer confidence rose to a six-month high in August, but Americans are becoming more anxious about the labor market after the unemployment rate jumped to near a three-year high of 4.3% last month. That increase in unemployment helped boost expectations the US Federal Reserve will cut interest rates next month. Lower rates can boost economic growth and demand for oil.

UBS Global Wealth Management sees a 25% chance of a U.S, recession, up from 20% previously, citing soft numbers in the July labor report. In Germany, meanwhile, the economy shrank in the second quarter.