OIL PRICES STEADY AS MARKET WATCHES RUSSIA UKRAINE PEACE TALKS RISING SUPPLY AND FED RATE DECISION

OIL PRICES STABILIZED ON TUESDAY AFTER FALLING 2% IN THE PREVIOUS SESSION AS INVESTORS MONITORED PEACE NEGOTIATIONS BETWEEN RUSSIA AND UKRAINE SIGNS OF ABUNDANT GLOBAL SUPPLY AND THE UPCOMING FEDERAL RESERVE INTEREST RATE DECISION.

MODEST GAINS AFTER MONDAY’S DROP

BRENT FUTURES ROSE 0.4% TO US$62.71 PER BARREL WHILE WTI ADVANCED 0.3% TO US$59.08 PER BARREL AT 11:45 GMT. THE RECOVERY FOLLOWED A DROP OF MORE THAN US$1 ON MONDAY AFTER IRAQ RESUMED PRODUCTION AT WEST QURNA 2 ONE OF THE WORLD’S LARGEST OIL FIELDS OPERATED BY LUKOIL.

THE RETURN OF IRAQI OUTPUT ADDS TO GLOBAL SUPPLY AT A TIME WHEN INVENTORIES ARE ALREADY HIGH ACCORDING TO ANALYSTS.

PEACE TALKS DRIVE SHORT TERM UNCERTAINTY

UKRAINE WILL PRESENT A REVISED PEACE PLAN TO THE UNITED STATES AFTER TALKS IN LONDON WITH FRANCE GERMANY AND THE UNITED KINGDOM. TIM WATERER CHIEF MARKET ANALYST AT KCM TRADE NOTED THAT OIL IS TRADING IN A NARROW RANGE UNTIL THE MARKET GETS A CLEARER SIGNAL ON THE OUTCOME OF THE NEGOTIATIONS.

IF THE TALKS FAIL PRICES COULD RISE DUE TO THE RISK OF DISRUPTED RUSSIAN SUPPLY. BUT IF THERE IS PROGRESS AND SIGNS THAT RUSSIAN FLOWS COULD RETURN TO THE GLOBAL MARKET PRICES SHOULD MOVE LOWER.

MEANWHILE THE G7 AND THE EUROPEAN UNION ARE DISCUSSING REPLACING THE CURRENT PRICE CAP ON RUSSIAN OIL WITH A COMPLETE BAN ON MARITIME SERVICES IN A BID TO REDUCE MOSCOW’S REVENUE.

GROWING SUPPLY AND CONCERNS FOR 2026

ANALYSTS ARE WAITING FOR THE INTERNATIONAL ENERGY AGENCY’S DECEMBER OIL MARKET REPORT DUE ON DECEMBER 11. PREVIOUS OUTLOOKS HAVE HIGHLIGHTED THE RISK OF A RECORD SURPLUS IN 2026.

KELVIN WONG SENIOR MARKET ANALYST AT OANDA SAID THAT IF THE IEA REPORT REINFORCES THE RISK OF OVERSUPPLY WTI COULD FALL TO TEST THE US$56.80 TO US$57.50 SUPPORT RANGE.

BJARNE SCHIELDROP CHIEF COMMODITIES ANALYST AT SEB ADDED THAT BRENT IS DRIFTING TOWARD US$60 DUE TO THE RISING VOLUME OF OIL AVAILABLE AT SEA. HE NOTED THAT PRICES HAVE NOT FALLEN FASTER BECAUSE OF US SANCTIONS ON ROSNEFT AND LUKOIL.

FED DECISION IN FOCUS

THE MARKET IS ALSO WATCHING THE FEDERAL RESERVE’S POLICY DECISION SET FOR WEDNESDAY. INVESTORS ARE PRICING IN AN 87% CHANCE OF A 0.25 PERCENTAGE POINT RATE CUT. LOWER RATES TYPICALLY SUPPORT OIL DEMAND BY REDUCING BORROWING COSTS.

PRIYANKA SACHDEVA SENIOR MARKET ANALYST AT PHILLIP NOVA WARNED THAT EVEN IF THE RATE CUT OFFERS SHORT TERM SUPPORT IN THE US$60 TO US$65 RANGE THE BROADER PRICE STRUCTURE REMAINS SHAPED BY EXPECTATIONS OF AN OVERSUPPLIED MARKET IN 2026.

CONCLUSION

THE OIL MARKET REMAINS CAUGHT BETWEEN GEOPOLITICAL UNCERTAINTY AND STRUCTURAL OVERSUPPLY. THE RESUMPTION OF OUTPUT IN MAJOR FIELDS THE INCREASE IN OIL AT SEA AND FEARS OF A 2026 GLUT ARE WEIGHING ON PRICES. AT THE SAME TIME PEACE TALKS BETWEEN RUSSIA AND UKRAINE AND THE FED’S RATE DECISION COULD SWING SHORT TERM SENTIMENT IN EITHER DIRECTION.

THE RESULT IS A MARKET TRADING IN A TIGHT RANGE BUT HIGHLY SENSITIVE TO ANY MAJOR SIGNAL IN THE COMING DAYS.