Crude Oil futures drop to Rs 5,103/barrel on Russia-Ukraine peace deal optimism

New Delhi, Dec 16 (PTI) Crude oil prices fell Rs 39 to Rs 5,103 per barrel in the futures trade on Tuesday amid weak global cues, as optimism over a possible Russia-Ukraine peace deal fuelled concerns about additional supplies returning to the market.

On the Multi Commodity Exchange (MCX), crude oil futures for December delivery decreased by Rs 39, or 0.76 per cent, to Rs 5,103 per barrel in a business turnover of 9,363 lots.

Similarly, the January contract declined Rs 44, or 0.85 per cent, to Rs 5,116 per barrel in 13,514 lots.

In the international markets, West Texas Intermediated (WTI) crude oil futures for January delivery dropped 1.27 per cent to USD 56.10 per barrel, while Brent crude was trading 1.12 per cent lower at USD 59.82 per barrel in New York.

"WTI crude oil futures are hovering near USD 56 per barrel, the lowest level since early 2021, weighed down by expectations of a supply glut and optimism over a potential Ukraine peace deal," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.

He noted that US officials signalled on Monday that an agreement between Russia and Ukraine could be closer than expected, with Washington agreeing to provide security guarantees to Kyiv, although key territorial issues remain unresolved.

According to Trivedi, any deal could pave the way for the lifting of US sanctions on Russian oil, potentially returning additional barrels to an already well-supplied global market.

"Supply pressures are intensifying as OPEC+ producers restored idled output, while non-OPEC producers, particularly in the Americas, also boost production," he said.

Adding to the bearish sentiment, weaker Chinese economic data released on Monday has raised concerns about slowing energy demand from the world's largest crude oil importer, further weighing on crude prices, Trivedi added. PTI DR HG BAL BAL