Oil prices decreased on Tuesday because of worries the US Federal Reserve might squeeze its commodity-friendly stimulus sooner rather than later.

Brent crude dropped by 48 cents to hit $107.99 a barrel, while US crude was down by 25 cents to settle at $92.78, reported Reuters.

The prices dropped quickly after a comment from the president of the Federal Reserve Bank of New York William Dudley, who said he was "getting more hopeful" on prospects for US economic recovery.

The president of the Philadelphia Fed Charles Plosser added that improved economic and labour market conditions suggest the Fed should set a fixed dollar amount on its current bond-buying programme and end it when that amount is reached.

Investors are anticipating that the Fed would commence tapering, or tighten the monthly stimulus programme that has supported commodities prices in recent years.

Prices also trembled after an increase in Saudi crude production by around 10mmbpd and US North Dakota production, which was nearing 1mmbpd.

Reuters predicted that the US oil inventories would have increased by 100,000 barrels last week while gasoline supply would have increased by 200,000 barrels.

Oil traders are waiting for American Petroleum Institute and US Energy Information Administration weekly data, which are scheduled on Tuesday and Wednesday respectively.

Investors are also waiting for Iran and world powers to meet, scheduled to happen on Wednesday, to resolve the nuclear programme that may provide an insight on whether sanctions against Iran would be lifted and, if so, when.

Sanctions against the nation have kept around 1mmbpd of oil out of the global market, and any deal could result in an influx of Iranian oil into the market, which is already been oversupplied. Oil prices were slightly supported by disruptions in Libya, which continue to boost the price of international benchmark Brent crude.

Libyan crude oil exports have decreased by more than 1mmbpd in the last six months, as fighting between rival militias and industrial unrest has spread across the country.

Image: Brent edges down towards $108 a barrel. Photo courtesy of