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Oil prices
world fell slightly in trading Tuesday (25/11), after strengthening in the previous session.
The weakening occurred in line with market concerns about the potential for excess supply next year with the uncertainty of Russia-Ukraine peace talks which have not yet shown progress.
Quote
Reuters,
Brent oil prices fell 17 cents or 0.3 percent to US$63.20 per barrel.Meanwhile, West Texas Intermediate (WTI) weakened 12 cents or 0.2 percent to US$58.71 per barrel.
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Both oil benchmarks rose 1.3 percent on Monday (24/11), after increasing doubts about reaching a Russia-Ukraine peace deal.
The doubts dampened expectations that Moscow’s flow of oil and oil products still under Western sanctions would once again flow freely into the market.
However, amid concerns over Russian shipments, the outlook for balancing oil supply and demand in 2026 is seen as looser.
A number of projections estimate that supply growth next year will outstrip demand growth.
Deutsche Bank said in a note that the global oil surplus in 2026 could reach 2 million barrels per day, and did not see a clear path to returning to a deficit even until 2027.
“The market direction towards 2026 still tends to be bearish,” said analyst Michael Hsueh.
Looser market expectations next year are currently offsetting the lack of progress in discussing the peace proposal put forward by the United States.
Kyiv and its European allies consider the proposal too favorable to Moscow.If a deal is reached, lifting sanctions could reopen previously restricted Russian oil supplies.
However, the oil market remains supported by rising expectations that the US central bank, the Federal Reserve, will cut interest rates at its December 9-10 policy meeting.
A number of Fed officials have expressed support for the cuts.
The interest rate cut is expected to boost economic growth and strengthen oil demand in the coming months.
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