Oil prices at their lowest point since 2021
The barrel of West Texas Intermediate (WTI) for January delivery retreated 1.08% on Monday to close at $56.82, its lowest level since February 2021.
Oil refinery in Los Angeles-File Image.
(AFP) Oil prices continued to fall Tuesday weighed down by talks on ending the war in Ukraine and prospects of a supply glut.
The price of a barrel of Brent crude oil, the European benchmark, fell below 60 dollars on Tuesday for the first time since May.
Meanwhile, its U.S. equivalent, the barrel of West Texas Intermediate (WTI) for delivery in January retreated 1.08% on Monday and closed at $56.82, its lowest level since February 2021.
"The continuation of peace negotiations between Russia and Ukraine have contributed to maintaining a bearish trend in the market," noted Bjarne Schieldrop of Seb.
A lifting of sanctions?
Donald Trump claimed that the deal on Ukraine is "closer" than "ever," as the Ukrainian leader Volodymyr Zelensky welcomed the "progress" in negotiations with United States to end the war with Russia.
"Such an agreement would undoubtedly be fragile, but for the market it would represent a further step toward the U.S. lifting a series of sanctions against Russia," specified Lohmann Rasmussen, an analyst at Global Risk Management.
According to the International Energy Agency (IEA), Moscow's exports fell by 420,000 barrels daily in November.
Russia's oil sector faces U.S. sanctions and Ukrainian drone attacks. An agreement on ending the war could facilitate the return of large numbers of Russian barrels to the market, which would be a bearish factor for oil prices.
A positive effect on the economy
In parallel, "fears of oversupply continue to dominate the long-term outlook," stressed David Morrison of Trade Nation.
In recent months, crude prices have slowly eroded mainly due to multiple increases in production quotas by the Organization of the Petroleum Exporting Countries and its allies (OPEC+), seen as far outpacing the advance in demand.
"Observed world stocks reached their highest level in four years in October," the IEA warned last week.
"Cheap oil has, of course, an incredible positive effect on the world economy," assured Bjarne Schieldrop, who speaks of a "stimulus" that could ultimately boost demand for crude.
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