Oil prices edge higher as US interest rates and Ukraine peace talks jostle for attention
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
NEW YORK :Oil prices edged up on Monday as investors gave more weight to the chances of a U.S. 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 0.4 per cent, to $62.78 a barrel by 11:05 a.m. EST (1605 GMT), while West Texas Intermediate (WTI) crude gained 31 cents, or 0.5 per cent, to $58.37.
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 U.S. 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 5 per cent of risk premium is excessive," they added, pointing to the potential for the war to drag on, reinjecting geopolitical risk into oil futures.
U.S. 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 35 per cent year-on-year to 520 billion roubles ($6.59 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 $57 a barrel and WTI at $53 in 2027 while keeping its 2026 estimates unchanged at $58 and $54 respectively.
U.S. INTEREST RATES
Global brokerages remain split on whether the U.S. 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 U.S. job market remains weak enough to warrant another quarter-point cut, though action beyond that will depend on a flood of data from U.S. statistical agencies catching up after the end of the government shutdown.
Lower interest rates could boost economic growth and oil demand by reducing borrowing costs for consumers and businesses.
"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 New Delhi-based research firm SS WealthStreet.
In Germany, meanwhile, business morale fell unexpectedly in November, a survey showed on Monday, as companies become more pessimistic about the chances of German economic recovery after two years of contraction.
