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 U.S. inflation data for further queues.
Brent crude futures fell 80 cents, or 0.9%, to $85.81 per barrel, while U.S. crude futures fell $1.05, or 1.3%, to $79.09 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.
Monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) are expected later on Tuesday and from the International Energy Agency (IEA) on Wednesday.
Traders will also be looking for clues from Tuesday’s crucial U.S. consumer price index (CPI) data for January. U.S. monthly consumer prices rose in the previous two months.
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 upcoming data tsunami will greatly influence the immediate risk appetite, but 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.”