Oil prices on Friday inched up nearly one per cent to a two-week high, supported by investors' expectations for stalled Ukraine peace talks in Moscow, a Federal Reserve interest rate cut and escalating US-Venezuela tensions.
Brent, the benchmark for two-thirds of the world's oil, rose 0.8 per cent, to settle at $63.75 per barrel at the market close on Friday. West Texas Intermediate, the gauge that tracks US crude, climbed 0.7 per cent, to settle at $60.08. Those were the highest closes for both crude benchmarks since November 18.
For the week, Brent was up about one per cent and WTI was up about three per cent, marking a second straight weekly gain for both contracts.
The perception that progress on a peace plan for Ukraine was stalling supported prices because it lowered expectations of a deal restoring Russian oil flows. Previously, expectations of an end to the war had weighed on prices, as a deal would potentially lead to sanctions being lifted on Russia and more oil exports. Washington imposed sanctions on top Russian oil producers Rosneft and Lukoil in October.
Additional supply is likely to push down prices, which are already on track for an annual loss due to oversupply worries.
“Crude oil is set to finish the week flat – curious, given there were several reasons to expect a rally,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Opec’s decision to pause its supply restoration strategy for the first three months of next year, the Trump administration’s softer climate stance, and US-Russia talks that yielded no real progress barely managed to entice buyers back in. Even typically supportive drivers – a weaker US dollar and softening Fed expectations – weren’t enough to spark a meaningful rally.
“WTI [West Texas Intermediate] remains trapped below the 50-day moving average, hugging the top of the August–November downtrend channel. The medium-term outlook stays timidly bearish.”
Giovanni Staunovo, an analyst at Swiss bank UBS, said while WTI is on the way to closing slightly higher than one week ago, Brent will probably close at similar levels to last week.
The market focus this week has been on the talks for a peace deal between Russia and Ukraine, but so far no deal has emerged, he added.
Crude has also been supported by growing expectations that the US Federal Reserve will cut interest rates again in December, which would provide a boost to both the economy and energy demand.
The markets are currently pricing in more than 85 per cent probability for a 25 basis points December rate cut. If this materialises, it should weaken the dollar further and provide support to oil prices as dollar-denominated commodities get cheaper, according to Vijay Valecha, chief investment officer of Century Financial.
Supply factors remain in focus. Supply was disrupted by Ukraine’s drone attack on the Caspian Pipeline Consortium's Black Sea loading facility. CPC, which handles more than 1 per cent of global oil, exports mainly from Kazakhstan through Russia and the Black Sea terminal.
Over the past two months, Ukraine has intensified its campaign against Russia’s oil refineries, hitting 21 of its 38 large plants. Last Friday, a drone struck the Orsk refinery on the Kazakh border more than 1,500km from Ukraine.
Refineries not only supply Russia’s domestic market, but also account for a large part of its oil exports. It has only three main customers for its crude now: China, India and Turkey.
However, US crude and fuel inventories rose last week as refining activity picked up, the Energy Information Administration said on Wednesday. Crude inventories rose by 574,000 barrels to 427.5 million barrels in the week ending November 28, the EIA said.
Crude prices are down about 17 per cent this year amid booming supply from the Americas and hikes from the Opec+ group. The International Energy Agency has forecast a record glut in 2026.
However, Mr Valecha said Hungary's report of uninterrupted Russian Druzhba pipeline flows post Ukrainian attacks has eased supply disruption fears that propped up prices earlier in the week.
Saudi Arabia added to these pressures by reducing January Arab Light prices, which support Brent crude demand from Asian consumers. The price cuts to Asia, the lowest in five years, reinforce oversupply concerns and intense competition within Opec+, he added.
“While Brazilian production has reached a new record high, we have also received reports of very strong demand in the US, India and Spain,” Mr Staunovo said. “We look for Brent to trade at $62 per barrel at the end of this year, so around current levels.
“Next week, the focus will be on the energy agencies' market report. I expect the more bearish ones to raise their demand estimates, as US oil demand has come in stronger in August and September.”
Opec+ agreed to keep oil production levels unchanged on November 30. The group, which pumps about half the world's oil, paused output increases for the first quarter of 2026 due to seasonal weak demand. It has brought 2.9 million barrels per day into the market since April this year.
Markets are also watching for a potential US military incursion into Venezuela after President Donald Trump said late last week that the US would start taking action to stop Venezuelan drug traffickers on land “very soon”.
Rystad Energy said in a note that such a move could put at risk Venezuela's 1.1 million barrels per day of crude oil production, which it supplies mostly to China.
Traders are also focused on Russia-India talks after President Vladimir Putin arrived in New Delhi on Thursday for his first state visit since the full-scale invasion of Ukraine. Since European countries cut back their reliance on Russian energy following the invasion, India has increased its purchases of discounted Russian crude.
