Oil prices continued to decline, extending recent losses amid growing optimism over the possibility of a peace agreement between Russia and Ukraine. This has fueled expectations of a potential easing of sanctions, alongside weak economic data from China that raised concerns about global demand.
Brent crude futures fell, while West Texas Intermediate crude also edged lower, as markets assessed positive signals regarding progress in negotiations to end the war in Ukraine. Analysts believe this optimism increases the likelihood of lifting U.S. sanctions on Russian oil companies, which could add new supply to a market already facing ample supply conditions.
The decline came as the United States signaled its readiness to provide NATO style security guarantees to Ukraine, while European negotiators pointed to progress in talks despite ongoing disagreements over territorial concessions.
At the same time, pressure on oil prices intensified following the release of Chinese economic data showing industrial production growth slowing to its weakest pace in more than a year, along with retail sales posting their slowest growth since late 2022. These figures raised concerns that weak domestic demand could limit China’s ability, as the world’s largest oil importer, to support global demand especially amid the rapid expansion in electric vehicle adoption.
Despite some supply related concerns after the United States seized an oil tanker off the coast of Venezuela, analysts noted that ample floating storage and China’s increased purchases of Venezuelan oil earlier on helped mitigate the overall impact on the market.
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