Oil prices fell on Tuesday (December 16), adding to the previous session's losses, as prospects for a Russia-Ukraine peace deal appeared to strengthen, raising expectations of potential sanctions relief.

Brent crude futures fell 89 cents, or about 1.5%, to $59.67 per barrel at 0942 GMT, while U.S. West Texas Intermediate crude traded at $55.90 per barrel, down 92 cents, or 1.6%. Both contracts are near their lowest levels since May of this year.

"Brent has fallen this morning to below $60 per barrel for the first time in months, as the market assesses the potential for a peace deal that would make additional Russian oil available and further add to the oversupply in the market," said Rystad analyst Janiv Shah.

The U.S. offered NATO-style security guarantees to Kyiv, and European negotiators reported progress in talks on Monday to end Russia's war in Ukraine, fueling optimism that an end to the conflict is near.

Meanwhile, Russia said it was unwilling to make any territorial concessions in talks to end the Ukraine war, state news agency TASS quoted Deputy Foreign Minister Sergei Ryabkov as saying.

"Progress in the talks will be offset by continued price declines as we enter 2026 with all the associated 'oversupply' predictions. Brent will hit a new low this year, but it won't fall below $55 a barrel before the end of the year," said PVM Oil Associates analyst John Evans.

Adding to the pressure, weak Chinese economic data released on Monday further fueled concerns that global demand may not be strong enough to absorb recent supply growth, IG market analyst Tony Sycamore said in a note.

Chinese factory production growth slowed to a 15-month low, official data showed. Retail sales also grew at their slowest pace since December 2022, during the COVID-19 pandemic.

Concerns about oversupply were somewhat offset by the US seizure of an oil tanker off the coast of Venezuela last week, but traders and analysts said that excess floating storage and a surge in Chinese purchases from Venezuela in anticipation of sanctions also limited the market impact of the move. (alg)

Source: Reuters.com