Brent crude futures settled down 55 cents, or 0.88%, at $61.94 a barrel

Oil prices edged lower on Tuesday after dropping 2% in the previous session, with investors keeping a close eye on peace talks to end Russia-Ukraine war, concerns about ample supply and a looming decision on U.S. interest rates.

Brent crude futures settled down 55 cents, or 0.88%, at $61.94 a barrel. U.S. West Texas Intermediate crude declined 63 cents, or 1.07%, to $58.25 a barrel.

Both contracts dropped by more than $1 a barrel on Monday after Iraq restored production at Lukoil’s West Qurna 2 oilfield, one of the world’s largest.

The next International Energy Agency report should hold clues on the global supply outlook.

The next market driver is likely to be the IEA monthly oil market report for December, released on 11 December, which has predicted a record surplus in the oil market in 2026, highlighted in previous outlook reports, said Kelvin Wong, senior market analyst at OANDA.

If the IEA continues to flag surplus risk in the oil market in its December report, WTI crude could drift downwards to test the range support zone at $56.80 to $57.50 a barrel, he added.

U.S. crude inventories declined by 4.78 million barrels last week, while gasoline stocks increased by 7 million barrels and distillate inventories rose by 1.03 million barrels, market sources said, citing American Petroleum Institute figures on Tuesday.

Weekly data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will be released on Wednesday.

Lower interest rates typically are a positive driver for oil demand given the decrease in borrowing costs, though some analysts were cautious about how much impact this could have on oil prices for now.