DTN Oil Update
WTI at $58 on Russia-Ukraine Peace Talks, Fed Cut Optimism
SECAUCUS, NJ (DTN) -- Crude futures rebounded Monday as growing optimism for a Federal Reserve rate cut in December offset concerns about the potential re-entry of Russian oil into the global marketplace if a U.S. peace plan for Ukraine succeeds.
The NYMEX WTI crude futures contract for January delivery settled up $0.78 at $58.84 bbl. The January ICE Brent futures contract rose $0.80 to $62.36 bbl.
Downstream, the December RBOB gasoline futures contract climbed by $0.0139 at $1.8973 per gallon. Front-month ULSD futures, however, bucked the higher trend, dropping $0.0489 to $2.4075 per gallon.
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The U.S. Dollar Index eased 0.023 points to 100.09 against a basket of foreign currencies.
Oil prices rose amid broader risk appetite across markets, following calls on Friday by senior Fed officials John Williams and Christopher Waller for a cut in U.S. lending rates in December to balance unemployment risks with inflation growth.
If this week's U.S. economic data reinforces the caution expressed by Federal Reserve officials, it could open the door to rate cuts sooner rather than later, Fawad Razaqzada, a commodities analyst at StoneX in London, said in a note Monday.
The Federal Reserve has already cut rates by quarter percentage points back-to-back between September and October and another reduction would likely bolster investor sentiment across markets.
U.S.-brokered Russia-Ukraine peace talks aimed at ending the nearly four-year war between the two countries have been highly productive, the White House announced on its website on Sunday.
Peace in Ukraine could further diminish geopolitical tensions, without which crude prices have trended lower -- particularly after the October signing of the Israel-Hamas agreement that ended the two-year-long Gaza war.
The lifting of trade sanctions against and the removal of sanctions against Russian energy firms Rosneft and Lukoil would add further downward pressure on oversupplied crude markets.
OPEC projected a 500,000-bpd crude surplus for the third quarter, reversing the 400,000-bpd deficit it forecasted in October. The IEA forecasted a 4.09 million bpd global oversupply for 2026, versus a prior 3.97 million bpd.
Separately, the Energy Information Administration estimated that U.S. crude production hit a record-high 13.76 million bpd in the third quarter.