Crude oil futures settled lower on Tuesday, despite a strong start to the session, as disappointing economic data and an expected increase in already buoyant US oil supplies eroded buyer appetite.

The Conference Board said consumer confidence fell in January as the outlook on business conditions and employment worsened. The Institute for Supply Management fell in the last month while the S&P/Case-Shiller 20-city composite index showed house prices fell for the third straight month.

Crude oil futures on the New York Mercantile Exchange settled 30 cents lower at $98.48 a barrel. Prices have risen 1.4% in January. Crude had risen earlier in the session on reports that the European Union had moved closer to agreeing on a €500bn bailout fund. Brent March crude rose 23 cents to settle at $110.98 a barrel and advanced 4.6% this month.

However gains were quickly snuffed out as investors digested the disappointing US data as well a dismal jobs picture in the euro zone. Unemployment in December rose to an average 10.4%, a 14-year high.

Prices were also pressured ahead of widely watched US inventory data. US crude oil stocks rose by 3m barrels in the week ended 27 January, adding to supplies that are already stand at an eight-week high.

Gasoline stocks are expected to rise by 200,000 barrels and distillates, used in heating oil are expected to decline by 1.3m barrels. The Energy Information Administration is due out on Wednesday.

Among precious metals locked in modest gains on Tuesday and registered a monthly gain of 11%.

Gold for April delivery advanced $6 to settle at $1,740.40 an ounce on the Comex division of the New York Mercantile Exchange, almost an eight-week high.

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