WTI heads for weekly gains as Fed hopes boost market and Venezuela tensions loom

BEIJING/SINGAPORE: WTI oil prices were poised for a weekly gain on Friday, supported by an expected Federal Reserve interest rate cut, escalating US-Venezuela tensions and stalled peace talks in Moscow, though both oil benchmarks dipped from the previous day.

Brent crude fell 14 cents, or 0.2%, to $63.12 per barrel by 0400 GMT.

The contract was largely stable on the week. US West Texas Intermediate (WTI) dipped 18 cents, or 0.3%, to $59.49 a barrel, although logging a weekly gain of about 1.6% and marking a second straight week of increase.

“The market weighs the impact of lower CPC exports and some positive news on the demand side, with a possible Fed rate cut in talk,” said Anh Pham, a senior research specialist at LSEG, referring to lower Kazakhstan oil shipments after a Ukrainian drone attack on the Caspian Pipeline Consortium’s Black Sea loading facility.

Both contracts settled up around 1% in the previous trading session.

Of economists surveyed in a November 28-December 4 Reuters poll, 82% of them expected a 25-basis-point interest rate reduction at next week’s Federal Reserve policy meeting.

A rate cut would stimulate economic growth and demand for oil.

“Looking ahead, supply factors remain in focus.

A peace deal with Russia would bring more barrels to the market and likely push prices down,“ said Pham.

“On the other hand, any geopolitical escalation will drive prices higher.

OPEC+ has agreed to keep production steady until early next year, so it adds some support for prices too,“ he said.

Markets also continued to brace for a potential US military incursion into Venezuela after President Donald Trump said late last week that the US would start taking action to stop Venezuelan drug traffickers on land “very soon”.

Rystad Energy said in a note that such a move could put at risk Venezuela’s 1.1 million barrels per day of crude oil production, which it supplies mostly to China.

Prices were also boosted this week by the failure of US talks in Moscow to achieve any significant breakthroughs over the war in Ukraine, which could have included a deal to let Russian oil back into the market.

Those factors kept prices supported despite a growing surplus.

Saudi Arabia had cut its January Arab Light crude selling prices to Asia to the lowest level in five years amid oversupply, according to a document reviewed by Reuters on Thursday.