NEW YORK: Oil prices edged up on Monday as investors gave more weight to the chances of a US interest rate cut over the prospect of a peace deal in Ukraine that could lead to an easing of sanctions on Russian oil.
Brent crude futures rose by 22 cents, or 0.4percent, to USD62.78 a barrel by 11:05 a.m. EST (1605 GMT), while West Texas Intermediate (WTI) crude gained 31 cents, or 0.5percent, to USD58.37. Both benchmarks had closed on Friday at their lowest since October 21.
The United States and Ukraine sought on Monday to narrow the gaps in a peace plan to end the Russia-Ukraine war after agreeing to modify a US proposal that Kyiv and its European allies viewed as a Kremlin wish list.
Recent price weakness is driven mainly by reported progress in Ukraine–Russian peace negotiations, analysts at energy advisory firm Ritterbusch and Associates said in a note.
“However, we feel that a reduction of more than 5percent of risk premium is excessive,” they added, pointing to the potential for the war to drag on, reinjecting geopolitical risk into oil futures. US sanctions on Russian oil companies Rosneft and Lukoil, which took effect on Friday, have caused friction that would normally boost prices, but the market is preoccupied by the peace talks, said Jorge Montepeque, managing director at Onyx Capital.
Russian state oil and gas revenue could fall in November by around 35percent year-on-year to 520 billion roubles (USD6.59 billion), owing to cheaper oil and a stronger rouble, Reuters calculations showed on Monday. European Council President Antonio Costa hailed the “new momentum” in negotiations to end the war in Ukraine and pledged that the European Union will keep supporting Ukraine. Looking ahead, JPMorgan forecast Brent crude at USD57 a barrel and WTI at USD53 in 2027 while keeping its 2026 estimates unchanged at USD58 and USD54 respectively.
Global brokerages remain split on whether the US Federal Reserve will cut interest rates at its December meeting after last week’s mixed signals on job growth and unemployment clouded the economic outlook. Fed Governor Christopher Waller said on Monday that available data indicates that the US job market remains weak enough to warrant another quarter-point cut, though action beyond that will depend on a flood of data from US statistical agencies catching up after the end of the government shutdown.
Comments
Comments are closed for this article.