Oil prices fell in Asian trading on Tuesday amid concerns about oversupply and uncertainty about the impact of US sanctions on Russian oil giants Rosneft and Lukoil. These concerns overshadowed optimism about progress toward the US government reopening.
Brent crude futures were down 12 cents, or 0.2%, to $63.94 a barrel by 04:26 GMT. WTI was down 14 cents, or 0.2%, at $59.99 a barrel.
Both indices gained about 40 cents in the previous session.
The longest government shutdown in US history could end this week. The Senate is now moving to the House of Representatives to approve a compromise that would restore federal funding.
While progress toward the government reopening has broadly buoyed markets, concerns about a crude oil oversupply are weighing on oil prices.
While OPEC production increases continue, global oil balances are increasingly trending downward on the supply side, while demand remains on a downward trend.
Earlier this month, OPEC+ agreed to raise its December production target by 137,000 barrels per day, the same as for October and November. It also agreed to pause increases in the first quarter of next year.
The oil glut triggered by the increase in OPEC supply has increasingly put investors on a bearish note in recent weeks, while Trump’s latest sanctions targeting Russian oil giants Rosneft and Lukoil are in investors’ focus.
Analysts note that the volume of oil stored on ships in Asian waters has doubled in recent weeks, as Western sanctions impact exports to China and India and import quota restrictions limit demand from independent Chinese refiners. Some refineries in China and India have turned to oil from the Middle East and other countries.
The potential threat to oil’s downtrend is the extent to which China will push Russian supplies into strategic stockpiles and whether India will yield to Trump’s suggestions that it delay further purchases from Russia.