London: Oil prices edged lower on Tuesday as expectations of higher output from OPEC and its allies outweighed optimism surrounding renewed trade talks between the United States and China.

Brent crude futures were trading near 65.6 dollars a barrel, while U.S. West Texas Intermediate hovered around 61.3 dollars. The dip followed reports that the OPEC+ alliance, which includes major producers such as Saudi Arabia and Russia, plans a modest increase in output later this year.

Sources close to the group said member nations are leaning toward another small production hike in December, estimated at about 137,000 barrels per day. The move comes as the alliance continues to gradually unwind supply cuts that were put in place to stabilize prices during previous downturns.

Despite positive signals from Washington and Beijing about progress toward a potential trade deal, analysts said the impact on oil demand remains limited for now. The optimism about global trade was not enough to counterbalance concerns about an oversupplied market.

Adding to the mixed outlook, Western sanctions on major Russian oil firms, including Rosneft and Lukoil, have created uncertainty over supply. However, industry experts believe that spare capacity in other OPEC+ countries could offset any short-term disruption caused by these restrictions.

The International Energy Agency has also noted that global oil demand growth is slowing amid economic headwinds and weaker industrial activity. This has prompted some financial institutions, such as Bank of America, to warn that Brent prices could drop below 50 dollars a barrel if production continues to rise while demand remains tepid.

Market observers are now watching the upcoming OPEC+ meeting closely to see how the group balances its output strategy with shifting global demand trends. For import-dependent economies such as India, moderate oil prices could help ease inflationary pressures and reduce import costs, though local factors like taxes and logistics will continue to influence retail prices.

Overall, the oil market remains caught between two competing forces  supply growth from producers and hopes for stronger global demand driven by trade recovery. Analysts suggest prices are likely to stay range-bound in the near term unless a major geopolitical or economic shift changes the balance.