Oil prices declined on Wednesday with tight supply worries not enough to outweigh concerns about a weaker global economy.
Brent crude futures for August settled 1.46% lower at $116.26. U.S. West Texas Intermediate (WTI) crude futures settled 1.77% lower at $109.78.
Both contracts rose more than 2% on Tuesday as concerns over tight supplies due to Western sanctions on Russia outweighed fears of that demand may slow in a potential future recession.
"The market is stuck in the push-pull between the current deteriorating macro backdrop and the looming threat of a recession, pitted against the strongest fundamental oil market set-up in decades, maybe ever," RBC Capital's Mike Tran said in a note.
Saudi Arabia and the United Arab Emirates have been seen as the only two members of the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity to make up for lost Russian supply.
French President Emmanuel Macron said this week he was told these producers will struggle to increase output further.
"Investors made position adjustments, but remained bullish on expectations that Saudi Arabia and the United Arab Emirates would not be able to raise output significantly to meet recovering demand, driven by a pick-up in jet fuels," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
OPEC and OPEC+, which includes allies such as Russia, begin a series of two-day meetings on Wednesday with sources saying chances of a big policy change look unlikely this month.
"Oil prices will likely stay above $110 a barrel, also on worries of potential supply disruptions due to hurricanes as the United States enters the summer," he said.
Analysts also warned that political unrest in Ecuador and Libya could tighten supply further.