Crude Oil Holds Near 1-Month Lows as Talks Progress

Crude oil prices remained close to 1-month lows after falling on renewed optimism about Ukraine peace negotiations, which analysts said could eventually ease restrictions on Russian exports and increase global supply. Brent traded at $63.06 a barrel and WTI at $58.57 in early global markets.

The pullback followed a session in which both benchmarks slipped after Ukrainian President Volodymyr Zelenskyy told European leaders he was prepared to advance a US-backed peace framework, saying only a few disagreements remained before a settlement could be reached. Market strategists said this reduced the geopolitical premium that has been influencing crude prices.

Analysts noted that if finalised, the deal could accelerate the unwinding of Western sanctions. IG market analyst Tony Sycamore wrote that WTI could edge toward $55 under a scenario where sanctions are lifted, and more Russian supply re-enters the market, adding that the market was waiting for clarity while risks continued to lean toward lower prices.

Gradual moves reflected a market weighing diplomacy against supply implications, with both crude benchmarks having risen 1.3% in the previous session before retreating again as sentiment shifted. Traders described the environment as headline-driven and sensitive to negotiation signals.

Will Sanctions Ease Increase Supply

US President Donald Trump said he instructed his representatives to engage separately with Russian President Vladimir Putin and Ukrainian officials, while reports suggested Zelenskyy could visit the United States within days to finalise terms. Meanwhile, Britain, Europe and the United States recently tightened sanctions under a renewed pressure campaign, and Indian purchases of Russian oil were forecast to fall to a three-year low in December.

Market reports said prices fell on Tuesday as optimism over progress in negotiations outweighed global equity gains, with crude futures positioned for a fourth straight monthly decline in November, marking the longest losing streak since 2023. MCX crude traded near ₹5,236 per barrel with narrow intraday movement.

The dip came despite Asian stocks tracking Wall Street gains driven by expectations of further Federal Reserve rate cuts. Analysts said crude had bounced off 1-month lows earlier in the week due to improving risk appetite tied to rate cut hopes, alongside agreements between the United States and Ukraine to revise parts of the peace proposal.

Market watchers added that Chinese stimulus measures aimed at supporting its housing sector provided limited support for crude at lower levels, though oversupply concerns continued to dominate sentiment. Non-OPEC output, particularly from US shale, combined with sufficient inventories, contributed to downward pressure in pricing models.

Demand Trends and Market Drivers

Traders cited softer global growth expectations, especially in Europe and parts of Asia, as a key factor restraining bullish positioning. Reports said fluctuating optimism around peace talks periodically weighed on prices when progress appeared more likely, reducing the geopolitical buffer that had previously supported benchmarks.

Expectations for a potential December US Federal Reserve rate cut strengthened after data indicated slowing retail spending and moderating inflation. Analysts said lower rates typically support economic activity and fuel consumption, though markets remained cautious. Both crude benchmarks had gained on Monday before slipping again as supply expectations resurfaced.

Market commentary described crude as volatile within tight ranges, with technical readings showing WTI support near $57 levels and resistance around $59, while Indian market levels indicated support between ₹5,175 and ₹5,120 and resistance between ₹5,300 and ₹5,375 for MCX crude.

As traders tracked negotiations, monetary signals and supply flows, crude steadied near recent lows while awaiting direction from either diplomacy or demand patterns. Which force will shape the next decisive move?

References:

Economic Times
Mint