After increasing during the previous session, oil prices remained mostly stable in Asian trade on Friday as optimism was bolstered by delayed diplomatic progress over the conflict in Ukraine and strong anticipation of a rate decrease by the U.S. Federal Reserve.
West Texas Intermediate WTI oil futures dropped 0.3% to $59.30 per barrel as of 21:56 ET (02:56 GMT), while Brent Oil Futures with a February expiration date dropped 0.2% to $63.15 per barrel.
On Thursday, both contracts increased by over 1%. WTI oil prices were expected to rise by 1.5% each week.
Stalled peace negotiations in Ukraine boost oil prices
After earlier this week’s U.S.-Russian negotiations failed to result in an immediate ceasefire in Ukraine, prices increased. A risk premium remained in the market as the lack of action dimmed optimism that energy restrictions on Russian oil would soon be lifted.
The postponed meeting, according to analysts, strengthened market fears that supply interruptions would continue, particularly in light of recent Ukrainian attacks on Russian energy infrastructure.
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Fed cut bets remain unchanged; PCE data is pending
Expectations that the Federal Reserve would lower interest rates at the policy meeting next week provided further assistance, with futures pricing in a high likelihood of a 25-basis-point drop. The idea that the Fed would start relaxing as economic momentum wanes has gained traction among investors.
Data on the US labor market supported that sentiment. Weekly unemployment claims fell precipitously to 191,000, the lowest level since September 2022, but analysts pointed out that the number could have been impacted by holiday-related volatility.
Simultaneously, a private payrolls data released earlier this week revealed that 32,000 positions were eliminated by American firms in November, indicating worsening hiring circumstances.
The publication of the U.S. Personal Consumption Expenditures (PCE) Price Index, the Fed’s favored inflation indicator, later on Friday is the current focus of markets. A more lenient interpretation may make the argument for policy relaxation stronger.
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