SINGAPORE, April 13 Reuters Oil prices retreated on Thursday after rising for two sessions, with investors still showing lingering concern over a possible U.S. recession and weaker oil demand.

Brent crude fell 32 cents, or 0.4, to 87.01 a barrel by 0630 GMT, while U.S. West Texas Intermediate WTI slid 22 cents, or 0.3, to 83.04.

Both benchmarks rose 2 on Wednesday to their highest in more than a month as cooling U.S. inflation data spurred hopes the Federal Reserve is likely to stop hiking interest rates.

Previous tightening, however, which has lifted interest rates to their highest since 2007, raised concerns that the Fed39;s focus on halting inflation might throttle economic growth and future oil demand in the world39;s biggest oil user.

Talks of a possible U.S. recession highlighted in the recent Fed minutes continue to bring the oil demand outlook into question, which is being negated by tighter supply conditions for now, said Yeap Jun Rong, a market strategist at IG.

The U.S. Consumer Price Index CPI climbed 0.1 last month, below economists39; expectations for a 0.2 gain, and down from a 0.4 increase in February, raising expectations the Fed is likely to stop hiking rates after a possible increase in May.

The Fed39;s staff assessing the potential fallout of banking stress projected a mild recession later this year.

The rally has ended due to worries that a possible U.S. recession will weaken crude oil demand, said Toshitaka Tazawa, an analyst at Fujitomi…