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Oil prices
moved flat in trading Monday (24/11), after falling around 3 percent last week.
This is as investors see the opportunity for the Fed to cut interest rates and the possibility of reaching a Russia-Ukraine peace deal which has the potential to open up more oil supplies to Moscow if sanctions are relaxed.
Quote
Reuters,
Brent oil prices were recorded as stable at US$62.56 per barrel.
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Meanwhile, West Texas Intermediate (WTI) edged down 2 cents or 0.03 percent to US$58.04 per barrel.Both benchmarks touched their lowest closing levels since October 21.
“The decline in prices was triggered primarily by President Trump’s aggressive push to push through a Russia-Ukraine peace deal, which the market sees as a quick path to reopening large supplies from Russia,” IG analyst Tony Sycamore said in a note.
Efforts towards an agreement are considered to be more influential for the market than the short-term disruption caused by US sanctions on Rosneft and Lukoil which came into effect last Friday.The sanctions have left around 48 million barrels of Russian oil stuck at sea.
Trump set a deadline of Thursday (27/11) for a deal to be reached, even as European leaders pushed to refine the content of the proposal.
The peace deal has the potential to lift sanctions that have suppressed oil exports from Russia, which in 2024 will be the world’s second largest oil producer after the US.
Apart from geopolitical factors, uncertainty regarding the direction of US interest rate policy also suppressed investors’ risk appetite.However, the chances of a rate cut in December increased after New York Federal Reserve President John Williams signaled the possibility of a cut in the near future.
“Expectations of a Fed rate cut in December could temper bearish sentiment by increasing global risk appetite,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS Wealth Street.
He added that oil prices have fallen nearly 17 percent so far this year, reflecting prolonged negative sentiment.
“At this lower level, value-based buying is expected to begin to emerge gradually,” he said.
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