HOUSTON: Oil prices fell 2 per cent on Tuesday, reversing earlier gains as US consumer prices unexpectedly rose in August, giving cover for the US Federal Reserve to deliver another hef ty interest rate increase next week.

Brent futures for November delivery fell $2.05, or 2.2pc, to $91.95 a barrel by 11:38 a.m. ET (1638 GMT). US crude was down $1.73, or 2pc, to $86.05 per barrel.

The consumer price index gained 0.1pc last month after being unchanged in July, the US Labour Department said.

Economists polled by Reuters had forecast a 0.1pc fall.

Fed officials are set to meet next Tuesday and Wednesday, with inflation way above the US central bank`s 2pc target.

`The Fed may have to raise rates quicker than expected which could cause a `risk back off` sentiment in crude and further strength to the dollar,` said Dennis Kissler, senior vice president of trading at BOK Financial.

Oilis generally pricedin U.S. dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies.

Renewed COVID-19 curbs China, the world`s secondlargest oil consumer, also weighed on crude prices.

The number of trips taken over China`s three-day MidAutumn Festival holiday shrank, with tourism revenue also falling, official data showed, as Covid-linked restrictions discouraged people from travelling.

Both contracts rose by more than $1.50 a barrel earlier in the session, supported by concerns over tighter inventories.

`The oil market`s structural outlook remains one of tightness, but for now, this is offset by cyclical demand headwinds,` Morgan Stanley said in a note.-Reuters