Brent crude futures settled 55 cents, or 0.88%, lower to US$61.94 a barrel. US West Texas Intermediate crude fell 63 cents, or 1.07%, to US$58.25 a barrel.
NEW YORK: Oil prices edged lower on Tuesday after falling 2% in the previous session, with investors keeping a close eye on peace talks to end Russia's war in Ukraine, concerns about ample supply and a looming decision on US interest rates.
Brent crude futures settled 55 cents, or 0.88%, lower to US$61.94 a barrel. US West Texas Intermediate crude fell 63 cents, or 1.07%, to US$58.25 a barrel.
Both contracts fell by more than US$1 a barrel on Monday after Iraq restored production at Lukoil's West Qurna 2 oilfield, one of the world's largest. Ukraine will share a revised peace plan with the US after talks in London between its President Volodymyr Zelenskiy and the leaders of France, Germany and Britain.
Peace between Ukraine and Russia could lead to the removal of international sanctions on Russian companies and free up restricted oil supply.
"Many in the market don't feel that Russia is serious about a peace agreement and they're just simply buying time," said Andrew Lipow, president of Lipow Oil Associates.
On Tuesday, power was out for roughly half of residents in the Ukrainian capital Kyiv after the latest Russian attacks on the country's energy system.
Aiming to cut Moscow's oil revenue, the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban, sources familiar with the matter said.
Oil cargoes at sea, which have increased by 2.5 million barrels every day since mid-August and are still climbing, continue to put pressure on oil prices, said SEB's chief commodities analyst Bjarne Schieldrop.
"The only reason why Brent crude hasn't fallen faster and deeper is because of the US sanctions related to Rosneft and Lukoil," he said.
The next International Energy Agency report should hold clues on the global supply outlook.
"The next (market) driver is likely to be the IEA monthly oil market report for December, released on 11 December, which has predicted a record surplus in the oil market in 2026, highlighted in previous outlook reports," said OANDA senior market analyst Kelvin Wong.
If the IEA continues to flag surplus risk in the oil market in its December report, WTI crude could drift downwards to test the range support zone at US$56.80 to US$57.50 a barrel, he added.
In the US, crude oil inventories were expected to have fallen last week, while distillate and gasoline inventories likely rose, a Reuters poll showed on Tuesday.
Weekly reports from the American Petroleum Institute will be released later on Tuesday, and from the Energy Information Administration, the statistical arm of the US Department of Energy, on Wednesday.
Also on the radar is the Federal Reserve's policy decision due on Wednesday, with markets pricing in an 87% probability of a quarter-point rate reduction.
Lower interest rates typically are a positive driver for oil demand given the decrease in borrowing costs, though some analysts were cautious about how much impact this could have on oil prices for now. — Reuters
