Oil prices fall after U.S. crude release and inflation data

Oil prices fell on Tuesday after the U.S. government said it would release more crude from its Strategic Petroleum Reserve and edged down further after U.S. inflation data, even though the annual rate of price increases had slowed.

Brent crude futures dropped by $2.01, or 2.3%, to $84.60 a barrel by 1414 GMT and U.S. crude futures were down $2.21, or 2.8%, at $77.93. Both benchmarks were on track for their biggest daily percentage fall since Feb. 3.

The U.S. Department of Energy (DOE) said it would sell 26 million barrels of oil from the SPR, which is already at its lowest level since 1983.

The DOE had considered cancelling the sale after U.S. President Joe Biden’s administration last year sold a record 180 million barrels from the reserve. But that would have required Congress to act to change the mandate.

Supply concerns also eased after the Energy Information Administration said it expected record March production from the seven biggest U.S. shale basins.

Elsewhere, crude exports resumed at a key Turkish port after a devastating earthquake rocked the region.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) raised its 2023 oil demand forecast by 100,000 barrels per day, citing the reopening of the Chinese economy after COVID restrictions. A monthly report from the International Energy Agency (IEA) is due on Wednesday.

U.S consumer prices accelerated in January, but the annual increase was the smallest since late 2021, increasing the likelihood of less aggressive interest rate hikes by the U.S. Federal Reserve.

A Reuters poll showed a majority of economists expect the Fed to raise interest rates at least twice more in the coming months to calm inflation, potentially weighing on risk assets such as oil.

“The broader view has not changed: inflation will ultimately be defeated,” said PVM analyst Tamas Varga, adding that Chinese economic growth and oil demand are set to revive in the second half of the year