Oil prices edged lower in early trading on Tuesday, extending losses from the previous session as growing optimism over a potential Russia-Ukraine peace deal raised expectations of an easing in sanctions and additional supply entering the market.
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Brent crude futures declined by 24 cents, or 0.40 percent, to trade at $60.32 per barrel by 0101 GMT. U.S. West Texas Intermediate (WTI) crude also fell 22 cents, or 0.39 percent, to $56.60 per barrel.
Market sentiment was influenced by reports that the United States had offered NATO-style security guarantees to Ukraine during talks with the country’s president in Berlin. U.S. officials described the move as unprecedented, fuelling optimism in parts of Europe that negotiations toward ending the conflict may be approaching.
Analysts said expectations of a diplomatic breakthrough have increased the likelihood of sanctions relief on Russia, one of the world’s largest energy exporters, adding downward pressure on oil prices.
Additional pressure came from weak economic data out of China. According to official figures released on Monday, factory output growth slowed to a 15-month low, while retail sales expanded at their slowest pace since December 2022 during the COVID-19 period.
IG market analyst Tony Sycamore said the soft Chinese data intensified concerns that global oil demand may struggle to absorb recent increases in supply. China is the world’s largest crude oil importer, and signs of slowing domestic demand are closely watched by energy markets.
Analysts also noted that China’s growing reliance on exports to offset weak internal consumption may be losing momentum. A cooling Chinese economy, combined with the rising adoption of electric vehicles, could further dampen oil demand.
These demand-side concerns outweighed recent supply-related developments, including the U.S. seizure of an oil tanker off the coast of Venezuela last week. Traders said ample floating storage and increased Chinese purchases of Venezuelan crude ahead of potential sanctions have limited the market impact of the seizure.
