The West Texas Intermediate (WTI) for January delivery lost 2.68 U.S. dollars, or 3.5 percent, to settle at 74.25 dollars a barrel on the New York Mercantile Exchange. It marked the lowest front-month contract finish since Dec. 23, 2021, according to Dow Jones Market Data.
Brent crude for February delivery dropped 3.33 dollars, or 4 percent, to close at 79.35 dollars a barrel on the London ICE Futures Exchange, the lowest finish since January.
The slide followed a downbeat session on the oil market, which saw the WTI and Brent drop 3.8 percent and 3.4 percent, respectively, on Monday.
Data released Monday showed a strong momentum in the U.S. service sector, raising concerns that the Federal Reserve may have to raise rates by more than expected.
"The market is still moving in fear that the Federal Reserve is going to drive the economy into a recession," Phil Flynn, analyst at The Price Futures Group, said in a note on Tuesday.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, on Sunday decided to stick to its existing policy of reducing oil production by 2 million barrels per day from November until the end of 2023 amid market uncertainties.
Traders also awaited data on U.S. fuel stockpiles as the Energy Information Administration will release its weekly petroleum status report on Wednesday. Analysts polled by S&P Global Commodity Insights expect U.S. supplies to show a decline of 2.4 million barrels for the week ending Dec. 2.
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