LONDON, Dec 6 Reuters Oil prices fell in a volatile market on Tuesday, as a stronger U.S. dollar and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and prospects of a demand boost in China.

Brent crude futures fell 90 cents, or 1.09, to 81.78 a barrel by 1055 GMT. West Texas Intermediate crude WTI fell 79 cents, or 1.03, to 76.14.

Earlier in the session, both contracts fell by more than 1 while Brent rose by over 1 in Asian trading.

Crude futures on Monday recorded their biggest daily drop in two weeks after U.S. services industry data indicated a strong U.S. economy.

The data reinforced the belief among investors that the Federal Reserve might stick longer with aggressive interest rate rises, supporting the U.S. dollar index on Tuesday.

A stronger greenback makes dollardenominated oil more expensive for buyers holding other currencies, reducing demand for the commodity.

Inflationary headwinds could still cause global economic turbulence in coming months, said Tamas Varga of oil broker PVM, but added that China39;s gradual COVID opening is a tentatively positive development.

In China, more cities are easing COVID19related curbs, prompting optimism for increased demand in the world39;s top oil importer.

The country is set to announce a further relaxation of some of the world39;s toughest COVID curbs as early as Wednesday, sources said.

The market was weighing the production impact of a price cap of 60bbl on Russian crude…