Oil prices fell in early trade on Tuesday, paring strong gains from the previous two sessions as markets remain cautious ahead of US inflation figures for April which will be key to the Federal Reserve's next interest rate decision.

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Brent crude price was down 31 cents, or 0.4 percent, at $76.70 and US West Texas Intermediate (WTI) crude lost 23 cents, or 0.3 percent, to trade at $72.92 at 0005 GMT.

Markets are awaiting US consumer price inflation figures for April due on Wednesday to provide some indication on the US central bank's next rate decision.

The Fed raised rates last week in what may be the last hike of its tightening cycle. It dropped guidance about the need for future hikes with inflationary pressure starting to ease.

US consumers said last month they expected slightly lower inflation in a year's time, a report showed on Monday.

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While oil markets fell sharply last week, prices rose on Friday and Monday as fears of recession in the US, the world's biggest oil consumer, eased and some traders saw crude's three-week slide on demand worries as overdone.

"The oil market was extremely oversold and it will probably continue to stabilize as long as Wall Street is still confident the Fed will cut rates later this year," Edward Moya, senior market analyst at OANDA, said in a note.

A round of voluntary output cuts by some members of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, begins this month and the group holds its next meeting on June 4.

"Oil prices won't be able to rise that much from here given all the growth demand fears, but expectations are high for OPEC+ to try to keep prices above the $70 a barrel level," Moya's note said.

Also supporting oil prices, Canadian province of Alberta declared a state of emergency over the weekend in response to wildfires that have displaced nearly 30,000 people and prompted energy producers to shut in at least 280,000 barrels of oil equivalent per day, more than 3 percent of Canada's output.

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