Oil Prices Dip amid Weakening Demand

Oil prices dropped for the second straight day Wednesday as investors watch peace talks between Russia and Ukraine, wondering if any breakthrough could bring more oil to global markets. The concern goes beyond just these talks - there's growing worry about too much supply hitting the market as stockpiles keep building up.

Brent crude futures fell 13 cents to $62.32 per barrel by 0221 GMT, a 0.21% decline. This comes after Tuesday's 1.1% drop, showing the market's continued nervousness about supply levels.

West Texas Intermediate, the U.S. oil benchmark, wasn't doing much better. It lost 12 cents to trade at $58.52 per barrel, down 0.20%. The American crude had fallen 1.2% in the previous session.

Here's what's driving the selloff: traders are betting that any progress in Russia-Ukraine peace negotiations could ease sanctions and bring Russian oil back into global markets. Russia is one of the world's biggest oil producers, so even the possibility of increased Russian exports is enough to push prices down.

But the peace talks aren't the only factor weighing on oil. Inventory data has been showing steady builds in crude stockpiles, suggesting demand isn't keeping up with current supply levels. This creates a double concern for oil bulls - not only might more supply come online if geopolitical tensions ease, but existing supply is already outpacing consumption.

For energy investors and oil-dependent economies, these price moves signal a shift from the supply shortage fears that drove oil higher in recent months. The market is now pricing in the possibility that the tight supply conditions might not last as long as previously expected.