09.06.202010:17:00UTC+00Oil Prices Fall 2% On Oversupply Concerns

Oil prices fell around 2 percent on Tuesday, with a stronger dollar and oversupply concerns weighing on the commodity.

Benchmark Brent crude fell 77 cents, or 1.9 percent, to $40.03 a barrel, after having fallen $1.50 the previous day to snap a seven-day winning streak.

U.S. West Texas Intermediate (WTI) crude futures were down 92 cents, or 2.4 percent, at $37.28 a barrel.

The dollar index rose as investors awaited the U.S. Federal Reserve's two-day monetary policy meeting, set to conclude on Wednesday.

Oversupply worries persist despite the OPEC and allies agreeing to sustain existing output cuts through end-July.

Investors remain disappointed that Saudi Arabia, the world's biggest oil producer, along with the United Arab Emirates and Kuwait, hasn't committed to extra supply cuts.

Saudi Energy Minister Prince Abdulaziz bin Salman said on Monday that the kingdom and Gulf allies Kuwait and the United Arab Emirates would not continue an additional 1.18 million bpd in reductions.

Saudi Arabia, in addition, raised prices for its crude, anticipating stronger demand.

With U.S. production returning to the market, analysts said this could undercut the fragile demand recovery, and undermine OPEC's efforts to shore up prices.

Risks of declines are starting to mount up after the price surge of recent weeks, Morgan Stanley analysts said.

Compliance could weaken at higher prices and there is little need to keep shut-in supply offline, the bank's analyst Martijn Rats said.