Oil plunged to multi-year lows on easing geopolitical risks and demand concerns

Crude oil futures extended losses on Tuesday, settling at their lowest levels since February 2021, as the potential de-escalation of the Russia-Ukraine conflict and weak Chinese economic data amplified fears of a looming global supply glut. 

Brent crude futures settled sharply lower at $58.92 a barrel, shedding $1.64 or 2.71%, breaking the psychological $60 support level. 

WTI followed suit, closing at $55.27 a barrel, down $1.55 or 2.73%.This marks the lowest settlement for oil futures in nearly five years.

Market sentiment was heavily influenced by reports of progress in peace negotiations between Russia and Ukraine. The prospect of a deal has led traders to price in the potential easing of sanctions, which could result in a surge of Russian crude volumes returning to the global market. 

Compounding the bearish mood was soft economic data from China, where factory output growth slowed to a 15-month low and retail sales expanded at their slowest pace since late 2022. Analysts highlighted that these indicators have fuelled concerns that global demand is insufficient to absorb recent supply growth. 

Written by: Aiman Haikal