Oil prices fell on Thursday due to expectations of a ceasefire between Ukraine and Russia
Markets are pricing in the possibility of a Russia-Ukraine peace plan. Expectations of a ceasefire between Russia and Ukraine, potentially releasing Russian resources, have driven down oil prices. This could pave the way for the lifting of Western sanctions on Russian supplies. However, trading is expected to remain weak due to the US Thanksgiving holiday.
Brent crude futures fell 33 cents, or 0.5%, to $62.8 per barrel by 04:45 GMT, while WTI Crude futures fell 32 cents, or 0.6%, to $58.33 per barrel.
Both contracts closed nearly 1% higher on Wednesday as investors assessed the risk of a supply glut and the possibility of a Russia-Ukraine peace deal.
US envoy Steve Witkoff will travel to Moscow to meet with Russian leaders on a possible plan to end the nearly four-year war in Ukraine.
Russia appears unwilling to make major concessions regarding the peace plan.
Oil prices are falling as of this morning, but the market remains weak, and direction is uncertain ahead of the OPEC+ meeting and Thanksgiving in the US.
Some members of OPEC+, which produces about half the world's oil, have been increasing production since April to gain market share. However, the group has indicated it will not change production levels at its meeting on Sunday.
The main issue is that prices are extremely fragile, and no significant progress has been made in the peace talks. A ceasefire, which would allow more Russian barrels to flow freely into the already oversupplied market, would keep crude oil on a downward trend in the medium term and would likely only cause short-term spikes.
Meanwhile, the support comes amid growing expectations that the US Federal Reserve (Fed) will cut interest rates in December. Lower interest rates generally stimulate economic growth and increase oil demand.
The oil market is caught between the potential for progress in Russia-Ukraine peace talks and what that would mean for oil supplies amid a broader risky trading environment, where expectations are rising that the U.S. Federal Reserve will cut interest rates in December.
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