Oil prices are on track for a weekly decline as signs of diplomatic engagement between the US and Russia eased supply fears, while cautious US Federal Reserve (Fed) signals and weakening US demand added pressure.
International benchmark Brent crude traded at $61.47 per barrel at 13.46 p.m. local time (1046 GMT), down 3.8% from last Friday's close of $63.90.
US benchmark West Texas Intermediate (WTI) was at $57.48 per barrel, falling around 3.8% compared with $59.76 last week.
Oil prices opened the week on a negative note as diplomatic contacts between the US and Russia over a potential resolution to the Ukraine crisis unwound part of the geopolitical risk premium.
Kremlin foreign policy aide Yuri Ushakov said Washington and Moscow are maintaining dialogue based on understandings reached at the Alaska summit, adding that these arrangements "provide a strong foundation for moving toward a peaceful settlement."
Despite persistent tensions between Russia and Ukraine, the perception that the two powers are keeping diplomatic channels open helped reduce uncertainty over global energy supplies, putting downward pressure on prices.
Cautious statements from US Federal Reserve (Fed) officials further weakened risk appetite across commodities. Their comments lowered market expectations for a December rate cut, with the probability falling from around 67% to 45%.
Oil prices extended their losses on Tuesday after reports indicated that shipments had resumed at a Russian oil depot previously halted due to a Ukrainian drone attack. The restart of flows eased supply concerns and weighed further on prices.
The downward trend continued on Wednesday after industry data pointed to weakening demand in the US, the world’s largest oil consumer. The American Petroleum Institute (API) reported US commercial crude inventories rose by 4.4 million barrels last week, while gasoline and distillate stocks also increased.
However, official data from the US Energy Information Administration (EIA) added some support on Thursday, showing commercial crude stocks fell by about 3.4 million barrels last week, far exceeding expectations of a 600,000-barrel drop. The decline signaled stronger refinery activity and export demand, although rising gasoline stocks raised concerns about domestic consumption.
On Friday, oil prices continued to slide as optimism for a diplomatic breakthrough in the Russia-Ukraine conflict and fading prospects for a Fed rate cut kept markets under pressure, even as new US sanctions on Russian oil majors Rosneft and Lukoil came into force.
By Ebru Sengul Cevrioglu
Anadolu Agency
energy@aa.com.tr
