© Reuters. FILE PHOTO: A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018. REUTERS/Francis Mascarenhas/File Photo
By Shadia Nasralla
LONDON (Reuters) -Oil prices dipped on Tuesday after the U.S. government said it would release more crude from its Strategic Petroleum Reserve, while traders look out for inflation data for further queues.
futures fell 90 cents, or 1%, to $85.71 per barrel by 1320 GMT, while futures fell $1.16, or 1.5%, to $78.98 per barrel. Both benchmarks are on track for their biggest daily percentage drop 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 fiscal year 2023 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) upped its 2023 oil demand forecast by 100,000 barrels per day, helped by the Chinese economy reopening after coronavirus restrictions.
A monthly report from the International Energy Agency (IEA) is due on Wednesday.
Traders were also looking for clues from Tuesday’s crucial U.S. consumer price index (CPI) data for January. It showed U.S consumer prices accelerated, but the annual increase was the smallest since late 2021, pointing to a continued slowdown in inflation and likely keeping the Federal Reserve on a moderate interest rate hiking path.
A Reuters poll showed a majority of economists expect the U.S. Federal Reserve to raise interest rates at least twice more in coming months. Higher inflation and ensuing rate hikes may weigh on risk assets such as oil.
“The broader view has not changed: inflation will ultimately be defeated,” said PVM analyst Tamas Varga.
“The second half of the year should bring with it tight oil balance greatly aided by reviving Chinese growth.”
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