Brent and WTI crude futures fell by 0.4% and 0.5% respectively, due to oversupply concerns. This happened despite uncertainty about the impact of US sanctions on Russian oil companies and optimism about the resumption of the US government's work.
Oil prices fell in Asian trading on Tuesday, as fears of oversupply outweighed uncertainty about the impact of US sanctions on Russian oil companies Rosneft and Lukoil, as well as optimism about progress in restoring the US government, UNN reports with reference to Reuters.
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At 07:17 GMT (9:17 Kyiv time), Brent crude futures fell 27 cents, or 0.4%, to $63.79 a barrel. US West Texas Intermediate crude was at $59.86 a barrel, down 27 cents, or 0.5%.
Both major grades rose by about 40 cents in the previous session.
The longest government shutdown in US history could end this week after the Senate approved a compromise solution to restore federal funding. The deal has now been sent to the House of Representatives, where Speaker Mike Johnson said he would like to approve it as early as Wednesday.
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While progress in restoring the government has generally boosted markets, fears of an oil surplus are holding back oil price gains, the publication writes.
"As OPEC production continues to rise, the global oil balance is taking on an increasingly bearish (characterized by a decline – ed.) tone on the supply side, with demand continuing to decline in conjunction with a slowdown in economic growth in major oil-consuming countries," analysts at consulting firm Ritterbusch and Associates note.
Earlier this month, OPEC+ agreed to increase December production targets by 137,000 barrels per day, in line with October and November figures. An agreement was also reached to halt production growth in the first quarter of next year.
While an oil surplus caused by rising OPEC supplies has put investors in a bearish mood in recent weeks, US sanctions also remain in focus, ANZ analysts noted in their Tuesday note, citing US President Donald Trump's latest measures against Russian oil giants Rosneft and Lukoil.
Sources told Reuters on Monday that Lukoil had declared force majeure at an Iraqi oil field it is developing, and Bulgaria is ready to seize the company's refinery in Burgas. The force majeure at the West Qurna-2 field in Iraq was the most serious consequence of the sanctions imposed last month.
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In addition, the volume of oil stored on ships in Asian waters has doubled in recent weeks after increased Western sanctions hit exports to China and India, and import quotas limited demand from independent Chinese refineries, analysts note. Some refineries in China and India have switched to buying oil from the Middle East and other countries.
One potential challenge to pessimistic oil forecasts "is the extent to which China will continue to increase Russian supplies to strategic reserves, and whether India will succumb to Trump's offers to postpone further purchases from Russia," Ritterbusch added.
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