Oil prices traded sideways on Friday, supported by the impasse in the Ukraine peace talks; however, expectations of an increasing supply surplus in the market limited the rise. Brent crude fell 0.8 cents to $63.18, while WTI dropped 14 cents to $59.53. Brent showed limited change on a weekly basis, while WTI is poised to record an increase of approximately 1.7% for the second consecutive time.
Opposing forces balance the market
PVM analyst Tamas Vargas stated that market volatility remained “in a narrow band”, noting that the lack of progress in Ukraine had a positive impact on prices, but OPEC’s resilient production balanced this effect.
Analysts emphasize that the possibility of an upcoming US Federal Reserve interest rate cut and tensions in Venezuela are among the factors that could push prices higher.According to a Reuters poll, 82% of economists expect the Fed to cut rates by 25 basis points next week. Such a move is expected to support economic growth and energy demand.
Supply outlook is creating pressure
Anh Pham from LSEG said that a possible peace agreement with Russia could lead to more oil entering the market and lowering prices. In response, he stated that “any kind of geopolitical escalation will push prices higher.” OPEC+’s decision to keep production constant until the beginning of the year provides limited support to the market. […] … According to Rystad Energy, such an operation could jeopardize the country’s daily production of 1.1 million barrels.
No progress in Ukraine talks
The failure of US-Russia talks in Moscow this week weakened expectations for the return of Russian oil to the market, supporting prices. Nevertheless, the global supply surplus is increasing. Saudi Arabia’s reduction of January Arab Light sales prices for Asia to the lowest level in five years stands out as the clearest indicator of the abundance in the markets.
