Oil prices fell on Tuesday, as fears that supply would exceed demand next year outweighed concerns that Russian supplies would remain under sanctions, while "talks to end the war in Ukraine remain inconclusive," Reuters reported, according to UNN.
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Brent crude futures fell 27 cents, or 0.4%, to $63.10 a barrel by 05:00 GMT (07:00 Kyiv time). West Texas Intermediate (WTI) crude fell 23 cents, or 0.4%, to $58.61.
On Monday, prices for both crude grades rose 1.3%, as doubts about a peace deal to end the Russian-Ukrainian war lowered expectations of unhindered supplies of Russian oil and fuel, which are under Western sanctions.
Despite market participants' concerns about Russian supplies, the overall outlook for the oil supply and demand balance in 2026 looks less optimistic amid numerous forecasts that supply growth will outpace demand growth next year.
"In the short term, the key risk is oversupply, and the current price level is vulnerable," Priyanka Sachdeva, senior market analyst at Phillip Nova, said on Tuesday.
Due to new sanctions against Russian oil companies Rosneft and Lukoil, as well as a ban on the sale of petroleum products derived from Russian oil to Europe, some Indian refiners, including private company Reliance, have reduced their purchases of Russian oil.
In the event of limited sales opportunities, Russia is seeking to increase exports to China, the publication writes.
On Tuesday, Russian Deputy Prime Minister Alexander Novak said at the China-Russia Business Forum in Beijing that Moscow and Beijing are discussing ways to expand Russian oil exports to China.
Overall, market analysts remain focused on the possibility of a widening supply and demand imbalance.
Deutsche Bank forecasts an oil surplus of at least 2 million barrels per day in 2026 and sees no clear path to a deficit even by 2027, the bank said in a report published on Monday.
"The outlook for 2026 remains bearish," analyst Michael Hsueh noted.
Expectations of weaker markets next year outweigh the lack of a resolution to the peace agreement between Ukraine and Russia, which has been supporting prices. A deal could lead to the lifting of sanctions on Moscow, opening up previously restricted oil supplies to the market.
Nevertheless, oil markets are receiving some support from expectations of US interest rate cuts at the December 9-10 meeting, with Federal Reserve members having expressed their support for such a reduction.
Lower interest rates could stimulate economic growth and boost oil demand.
"The oil market is in a tug-of-war between oversupply driven by caution and demand hopes based on monetary easing," Sachdeva said.