In anticipation of the release of the significant U.S. inflation figures, oil prices fell by nearly 1% on Monday as investors concentrated on worries about short-term demand.

Brent crude futures slipped by 1.3%, to $85.25 per barrel while U.S. WTI crude plunged by 1.3% to $78.61 after achieving earlier gains at 2.1%.

Energy traders are projecting a potentially deteriorating crude demand outlook as a crucial inflation data could compel the Fed to tighten policy much more aggressively, which is causing crude prices to decline.

There have been worries that the U.S. Federal Reserve's recent hikes in interest rates to combat inflation may reduce demand for oil and slow down economic growth.

The resumption of Azerbaijani oil exports from Turkey's Ceyhan facility on Sunday also helped to partly allay supply worries.

Last week, Brent and WTI contracts surged over 8%, buoyed by hopes for a rebound in Chinese demand after COVID limitations were lifted in December.