BENGALURU: Oil prices fell on Tuesday after the US government said it would release more crude from its Strategic Petroleum Reserve, lifting some supply concerns from the market.

Brent futures for April delivery fell $1.22, or 1.4%, to $85.39 a barrel by 11:17 a.m. EST (1617 GMT). US West Texas Intermediate crude futures for March fell by $1.32, or 1.7%, to $78.82 a barrel.

Both benchmarks were down by more than $2 a barrel earlier in the session, but pared some losses after data showed the U.S consumer price index accelerated at its slowest annual pace since late 2021, raising the likelihood of less aggressive interest rate hikes by the US Federal Reserve.

“The financial markets are still trying to digest the CPI report, with rate hike expectations moving up and down and influencing asset classes such as oil,” said UBS analyst Giovanni Staunovo.

“With US equity markets moving up, oil is paring some of its earlier losses,” he said.

On Monday, the US 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 US 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 US shale basins.

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

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.