Crude prices eased about 1 per cent on Friday as the US pushed for a Russia-Ukraine peace deal that could boost global oil supplies, while uncertainty over US interest rates curbed investors’ risk appetite.
Brent futures fell by 82 cents or 1.3 per cent to settle at $62.56 per barrel, and the US West Texas Intermediate (WTI) crude futures slid by 94 cents or 1.6 per cent to settle at $58.06 a barrel.
The US pushed for a peace plan between Ukraine and Russia to end the three-year war, while sanctions on Russian oil producers Rosneft and Lukoil were set to take effect on Friday.
Ukrainian President Volodymyr Zelenskiy warned on Friday that Ukraine risked losing its dignity and freedom, or the backing of President Donald Trump, over a peace plan that the US said Ukraine should accept within a week.
Russian President Vladimir Putin said on Friday that US proposals for peace in Ukraine could be the basis of a resolution of the conflict but that if Ukraine turned down the plan then Russian forces would advance further.
Market analysts noted that a peace deal could allow Russia to export more fuel. Others warned that that Ukraine has repeatedly dismissed Russia’s demands as unacceptable, noting that the market is also becoming skeptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective.
A stronger US Dollar also weighed on oil prices as the greenback hit a six-month high versus a basket of other currencies, making Dollar-priced oil more expensive for many global buyers.
On US interest rates, several policymakers remained skeptical about the December move. Dallas Federal Reserve President Lorie Logan called for leaving the policy rate on hold “for a time” while the central bank assesses how much of a brake the current level of borrowing costs is putting on the economy.
Boston Federal Reserve President Susan Collins said policy was in the right place, suggesting she remains skeptical of the need to cut rates again at next month’s meeting while New York Federal Reserve President John Williams said the central bank can still cut interest rates “in the near term” without putting its inflation goal at risk.
Lower interest rates could boost economic growth and oil demand.