Oil prices continue to decline amid hopes for a peace agreement between Russia and Ukraine

Oil prices continued their decline for the third consecutive session on Friday, falling by about 1.5%, driven by two main factors: US efforts to broker a peace agreement between Russia and Ukraine, and a decrease in investor risk appetite due to expectations of a delayed interest rate cut.

Price Trend:

West Texas Intermediate crude fell to levels close to $57.80 per barrel.

Brent crude declined to the $61.70 per barrel area.

Key Drivers of the Decline:

- Peace Efforts and Their Impact on Supply

Market sentiment turned negative as US diplomatic efforts to end the Russian-Ukrainian conflict intensified.

Any potential peace agreement could pave the way for an increase in global oil supply, particularly with the possible easing of restrictions on Russian exports.

- Reduced Expectations of an Interest Rate Cut

The probability of the Federal Reserve cutting interest rates in December fell to just 35%, compared to 90% a month earlier, prompting investors to reduce their riskier positions, including oil.

- Strong Dollar and Declining Stocks

The strengthening US dollar and the weak performance of US stocks, particularly the S&P 500's bearish reversal, have contributed to increased downward pressure on prices.

Analysts Doubts About the Timeline

ANZ Bank analysts expressed their doubts, stating, "Reaching an agreement is by no means certain," citing Kyiv's repeated rejection of Russian demands. There is also growing skepticism about the effectiveness of the new sanctions against Rosneft and Lukoil, which took effect on Friday.

"The oil market is likely to face several headwinds in the coming weeks," said OANDA's senior market analyst.

He pointed to indirect downward pressure through a negative feedback loop in the US stock market following the S&P 500's bearish reversal.