Oil prices fall on Tuesday

Oil prices fell on Tuesday, extending losses from the previous session as rising optimism over a potential Russia-Ukraine peace deal fueled expectations of an eventual easing of sanctions and added to pressure from weak demand signals.

Brent crude slipped 0.6 per cent to $60.21 a barrel by 0350 GMT, while US West Texas Intermediate (WTI) fell 0.5 per cent to $56.52 a barrel.

Markets weighed signs of progress in diplomatic efforts to end the war in Ukraine, which raised concerns that US sanctions on Russian oil could ultimately be lifted, exacerbating an already well-supplied market. Optimism was supported by reports of advances in talks, including US proposals to provide NATO-style security guarantees for Kyiv, although key issues, such as territorial concessions, remain unresolved.

Prices were also dragged lower by soft Chinese economic data, which renewed worries about global demand. China’s factory output growth slowed to a 15 month low, while retail sales posted their weakest growth since December 2022, highlighting strain in domestic demand and raising doubts over the sustainability of export-led growth. A cooling Chinese economy would further weigh on oil demand in the world’s largest importer, where electric vehicle adoption is already curbing fuel consumption.

These factors offset supply-side concerns following the US seizure of an oil tanker off Venezuela last week, with traders noting ample floating storage and increased Chinese purchases of Venezuelan crude ahead of sanctions as limiting the impact on prices.

Attribution: Reuters