Oil extends decline by 1.5% on hopes for Russia-Ukraine peace deal
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 96 cents, or 1.5%, to $62.42 a barrel by 0730 GMT, after slipping 0.2% in the previous session. U.S. West Texas Intermediate was down 1.8%, or $1.03, at $57.97 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.
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, amid weaker U.S. stocks performance, was also depressing oil prices, as the dollar-denominated commodity becomes more expensive for holders of other currencies.
Source: Reuters.com
