LONDON, June 12 Reuters Oil prices fell on Monday ahead of a U.S. Federal Reserve policy meeting as investors tried to gauge the central bank39;s appetite for further interest rate hikes and amid concerns about the prospects for Chinese demand and rising Russian supply.

Brent crude futures were down 2.12, or 2.8, to 72.67 a barrel by 1350 GMT. U.S. West Texas Intermediate WTI crude was down 2.33, or 3.3, at 67.84.

Last week both benchmarks posted a second straight weekly decline as disappointing Chinese economic data raised concerns about demand growth in the world39;s largest crude importer.

That helped erase a boost in prices after Saudi Arabia pledged to cut production in July by 1 million barrels per day bpd.

Oil prices are caught in a clash between two opposing forces, bearish asset allocators who point to monetary contraction and bullish oil speculators expecting lower inventories in 2H23, Francisco Blanch of Bank of America Global Research said in a note.

The bearish allocators will maintain the upper hand for now, as oil prices struggle to rally until the Fed eases money supply, Blanch said. The bank still expects Brent crude to average about 80 a barrel in 2023.

The Fed39;s rate hikes have strengthened the dollar, making commodities denominated in the U.S. currency more expensive for holders of other currencies and weighing on prices.

Most market participants expect the U.S. central bank to leave interest rates unchanged when it concludes its twoday…