US Fed expected to raise rates by 25 basis points this week
Latest OPEC output cuts of 1.16 mln bpd take effect from Monday
Market seen in deficit through second quarter analyst

TOKYO, May 1 Reuters Oil fell on Monday as concern over the economic impact of the U.S. Federal Reserve potentially raising interest rates and weaker Chinese manufacturing data outweighed support from new OPEC supply cuts taking effect this month.

The Fed, which meets on May 23, is expected to increase interest rates by another 25 basis points. The U.S. dollar rose against a basket of currencies on Monday, making oil more expensive for other currency holders.

Brent crude fell 1.21, or 1.5, to 79.12 a barrel at 0822 GMT, while U.S. West Texas Intermediate WTI crude lost 96 cents, or 1.3, to trade at 75.82.

The prospect of further rate hikes to be announced by the Fed this week is expected to drive an increase in nearterm price volatility, said Baden Moore, head of commodity and carbon strategy at National Australia Bank NAB.

In the week ahead, the Reserve Bank of Australia is widely expected to extend a rate hike pause on Tuesday and the European Central Bank could surprise with an outsized halfpoint increase on Thursday.

Weak economic data from China also weighed. China39;s manufacturing purchasing managers39; index PMI declined to 49.2 from 51.9 in March, slipping below the 50point mark that separates expansion and contraction in activity on a monthly basis.

Some support came from…