The US government has announced that it will release crude from the Strategic Petroleum Reserve (SPR), as mandated by lawmakers. Oil prices fell on Tuesday as the decree was contrary to some traders’ expectations that the release could be canceled or delayed.
Brent crude futures fell as 70 cents, or 0.81%, at 0256 GMT to $85.91 per barrel, while WTI crude futures fell by 93 cents, or 1.16%, to $79.21 per barrel.
The U.S. Department of Energy said it will sell 26 million barrels of oil from SPR after the previous session ends. Energy traders failed in their expectations as they awaited news of the SPR refill.
US SPR will drop to the lowest level since 1983. After US President Joe Biden’s administration sold a record 180 million barrels of reserve last year, there was talk of canceling the 2023 fiscal year sale. But in this case, it requires Congress to take action to change the mandate.
Traders will look for clues from the key US consumer price index (CPI) data for January on Tuesday. US monthly consumer prices rose in the previous two months rather than falling as previously predicted, raising the risk of higher inflation readings in the coming months.
Any higher-than-expected data could result in the resale of risky assets, including oil.
Supply concerns also eased after the Energy Information Administration (EIA) announced that it expects record production in March in the seven largest US shale oil fields.
On the supply side, crude oil exports resumed at a key Turkish port after a devastating earthquake that shook the region.
