Oil prices are declining as optimism about demand fades.

Oil prices fell on Tuesday, January 7, continuing their decline for the second consecutive session after a rise the previous week, although concerns about supply cuts from Russia and Iran amid expanding Western sanctions helped prevent further losses.

According to Ukrinform, this was reported by Reuters.

Brent futures decreased by 8 cents, or 0.1%, to $76.22 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped by 15 cents, or 0.19%, to $73.42.

Both benchmarks fell on Monday after a five-day increase last week, having reached their highest levels since October on Friday amid expectations of greater fiscal stimulus to boost China's economy.

“The weakness this week is likely tied to a technical correction as traders respond to softer economic data globally, undermining the optimism seen earlier,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, referring to economic news from the U.S. and Germany.

Oil prices are also influenced by rising supply from non-OPEC countries, which, combined with weak demand from China, is expected to contribute to market oil supply this year.

This week, market participants are looking forward to additional data regarding the December non-farm payroll report in the U.S. on Friday to gauge U.S. interest rate policy and oil demand prospects.

However, concerns over supply cuts from Russia and Iran amid sanctions have kept oil prices at lower levels.

Uncertainty has led to an increase in demand for Middle Eastern oil, reflected in the February price hike for Saudi Arabian oil for Asia, marking the first such increase in three months.

The U.S. Commodity Futures Trading Commission reported on Monday that in the week ending December 31, financial managers raised their net long positions in U.S. oil futures and options.

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