Oil falls for a second day - Expectations of oversupply and sanctions on Russia weaken
prices Global oil markets fell for a second consecutive session on Tuesday, amid growing concerns over global oversupply and the impact of US sanctions on Russian exports.
Spot Price Action
Oil futures fell slightly, with global benchmark Brent crude dropping 0.5% to $63.30 per barrel, while US West Texas Intermediate crude fell 0.6% to $59.25 per barrel.
Price Pressure Factors
Oil is under multiple downward pressures, most notably:
- Expectations of oversupply:
The global oversupply of oil is expected to expand in the coming months, putting a cap on potential price gains and fueling the current downtrend.
- Return of Russian flows:
Reports that oil shipments from Russia's main port, Novorossiysk, have resumed after a two-day halt due to a Ukrainian offensive have eased supply concerns.
- US sanctions fallout:
Recent US sanctions on Russian oil companies are starting to show tangible effects on markets, with Moscow crude currently trading at a significant discount to global benchmarks.
The future of demand for Russian
oil Traders are currently focused on the planned US sanctions on Russian oil giants Rosneft and Lukoil, which are set to take effect on November 21.
This has prompted major buyers such as China, India and Turkey to halt purchases and seek alternative sources of supply, threatening to reduce Russia's share of the global oil market.
Future forecasts
In light of continued geopolitical instability and the structural expansion of global oil supply, analysts expect crude oil prices to decline further in the coming period, as oversupply expectations continue to weigh on markets.
These developments demonstrate the sensitivity of energy markets to geopolitical factors and oil policy decisions, while the global economic outlook remains a critical factor in determining medium-term price trends.
From a technical perspective, we are waiting for Brent crude to break through the neckline before considering buying.
As mentioned in our Brent crude analysis, which you can find here
