Oil prices fell 1.5% on Friday, extending declines for a third straight session as the U.S. pushed for a Russia-Ukraine peace deal to grow global market supply.
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Oil prices fell 1.5% on Friday, extending declines for a third straight session as the United States pushed for a Russia-Ukraine peace deal that could swell global market supply, while uncertainty over its rate cuts curbed investors’ risk appetite.
Brent crude futures fell 93 cents, or 1.5%, to $62.45 a barrel by 0416 GMT, after slipping 0.2% in the previous session. U.S. West Texas Intermediate was down 1.7%, or 98 cents, at $58.02 a barrel, after ending Thursday down 0.5%.
Both contracts are set to fall more than 2.5% this week on oversupply concerns, erasing most of last week’s gains.
Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, while sanctions on top Russian oil producers Rosneft and Lukoil are set to take effect on Friday.
“Oil extended declines as Zelenskiy agreed to work on a US- and Russia-drafted peace plan, with U.S. sanctions on two Russian oil majors due Friday,” Saxo analysts said in a client note, referring to Ukrainian President Volodymyr Zelenskiy.
“With Ukraine yet to formally reject the deal, the slim odds of an agreement are weighing on prices, as it would remove much of the war’s geopolitical risk premium baked into crude,” IG market analyst Tony Sycamore said in a note.
However, some analysts were sceptical just how soon a peace deal could be struck.
“An accord is far from certain,” ANZ analysts told clients in a note, adding that Kyiv has repeatedly dismissed Russia’s demands as unacceptable, hindering any breakthrough.
“The market is also becoming sceptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective.”
Lukoil has until December 13 to sell its huge international portfolio.
A stronger dollar was also depressing oil prices as it makes the dollar-denomined commodity more expensive for holders of other currencies.
Dollar strength against Asian currencies was very evident after investors further downplayed odds of a follow-up rate cut at the December FOMC, following the release of minutes from its very divided October meet, UOB analysts said in a client note.
The dollar was on track for its best week in more than a month on Friday as investors wagered the Federal Reserve is unlikely to cut rates next month.
