Oil steady as investors weigh hopes for Ukraine peace talks, Fed rate cut
FILE PHOTO: A drone view of a pump jack and drilling rig south of Midland, Texas, U.S. June 11, 2025. REUTERS/Eli Hartman/File Photo
LONDON :Oil prices stabilised on Monday after last week's decline of about 3 per cent, as investors weighed the chances for a U.S. rate cut against the prospect of a Ukraine peace deal that could lead to an easing of sanctions on major producer Russia.
The United States and Ukraine were set to resume work on a revised peace plan ahead of a Thursday deadline set by U.S. President Donald Trump, after agreeing to adjust an earlier version that critics said was too favourable to Moscow.
Brent crude futures declined 20 cents, or 0.3 per cent, to $62.36 per barrel by 1131 GMT, while West Texas Intermediate was down 19 cents, or 0.3 per cent, at $57.87 a barrel.
"The market is overwhelmingly focused on the macro view, which is this Ukraine peace treaty and the U.S. economy," said Jorge Montepeque, managing director at Onyx Capital Group.
U.S. sanctions on state-owned Rosneft and private firm Lukoil, which took effect on Friday, have caused friction that would normally send prices up, but the market is preoccupied by the peace deal making it bearish for oil, he added.
U.S. Secretary of State Marco Rubio said on Sunday that the Thursday deadline might not be set in stone.
A peace deal could potentially lead to a rollback of sanctions that have challenged Russian oil exports. Russia was the second-largest producer of crude oil in the world after the United States in 2024, according to the U.S. Energy Information Administration.
Uncertainty regarding U.S. interest rate cuts is another factor suppressing investors' appetites.
However, the possibility of a rate cut next month increased after New York Federal Reserve President John Williams suggested a cut in the near term.
"Expectations of a potential Fed rate cut in December may also provide a counterbalance to bearish sentiment by improving global risk appetite," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
"Crude prices have already declined nearly 17 per cent this year, reflecting persistent negative sentiment ... at these lower levels, value buying is expected to gradually emerge."
