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Oil prices held largely steady in Asian trading on Friday, pausing after the previous session’s gains, as stalled diplomatic efforts to end the Ukraine war and rising confidence in a U.S. Federal Reserve rate cut underpinned sentiment.
As of 21:56 ET (02:56 GMT), Brent crude futures for February delivery slipped 0.2% to $63.15 per barrel, while West Texas Intermediate (WTI) futures dipped 0.3% to $59.30 per barrel.
Both benchmarks gained nearly 1% on Thursday, with WTI on track for a 1.5% weekly rise.
Stalled Ukraine peace negotiations keep risk premium elevated
Oil prices found support after high-level talks between U.S. and Russian officials earlier this week failed to yield any meaningful progress toward a Ukraine ceasefire.
The absence of a breakthrough reduced hopes that sanctions on Russian crude might be eased soon, reinforcing expectations that geopolitical risk and potential supply disruptions will persist.
Recent Ukrainian strikes on Russian energy infrastructure have further heightened concerns over supply stability, analysts noted.
Fed rate cut expectations remain firm
Broader market sentiment was also lifted by growing confidence that the Federal Reserve will cut interest rates at next week’s policy meeting. Futures currently price in a strong likelihood of a 25-basis-point reduction, as investors increasingly expect the Fed to respond to cooling economic indicators.
The latest U.S. labour market data painted a mixed picture:
- Initial jobless claims fell to 191,000, the lowest since September 2022.
- ADP data showed private-sector payrolls shrank by 32,000 in November, indicating weaker hiring momentum.
All eyes on U.S. PCE inflation data
Markets now turn their attention to Friday’s release of the Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation gauge.
A softer reading could reinforce the case for easing, potentially providing additional support for crude prices.
Oil markets remain sensitive to both geopolitical developments and monetary policy signals as traders assess the balance between supply risks and demand trends.
