Oil slips on Russia-Ukraine peace deal talks, weak China data

By Colleen ‌Howe and Emily Chow

BEIJING, Dec 16 (Reuters) - Oil prices fell on Tuesday, adding to ‍the previous ‌session's losses, as prospects for a Russia-Ukraine peace deal appeared to strengthen, raising expectations ⁠of a potential easing of sanctions.

Brent crude ‌futures fell 35 cents, or 0.6%, to $60.21 a barrel by 0350 GMT, while U.S. West Texas Intermediate crude was trading at $56.52 a barrel, down 30 cents, or 0.5%.

"Crude oil fell as the market ⁠weighed up signs of optimism on a peace deal being reached between Russia and Ukraine," ANZ analysts said ​in a note.

"This raised concerns that recent U.S. sanctions on ‌Russian oil companies would be ultimately lifted, ⁠adding to an already well supplied market."

The U.S. offered to provide NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday to end Russia's ​war in Ukraine, an unprecedented step that sparked optimism that talks were drawing closer to negotiating an end to the conflict. However, a deal on territorial concessions remained elusive.

Adding to the pressure, soft Chinese economic data released on Monday further fuelled concerns that ​global demand ‍may not be strong enough ​to absorb recent supply growth, said IG market analyst Tony Sycamore in a note.

China's factory output growth slowed to a 15-month low, official data showed. Retail sales also grew at their slowest pace since December 2022, during the COVID-19 pandemic.

The data raised concerns that China's strategy of relying on exports to offset weak domestic demand may be faltering. A ⁠cooling economy would further pressure demand in the world's largest buyer of oil, where the surging use of electric vehicles is already ​weighing on petroleum consumption.

Those factors offset concerns about supply after the U.S. seized an oil tanker off the coast of Venezuela last week.

Traders and analysts said a glut of floating storage and a surge in Chinese buying from Venezuela ‌in anticipation of sanctions are also limiting the market impact of the move.

(Reporting by Colleen Howe in Beijing and Emily Chow in Singapore; Editing by Muralikumar Anantharaman and Jacqeline Wong)