The Week in Oil : Excess Supply, Ukraine-Russia Peace Deal in Focus

By Giulia Petroni

Here's a look at what happened in oil markets in the week of Nov. 17-21 and what the focus will be in the days to come.

OVERVIEW: Oil prices are poised for a weekly loss of more than 3% after Ukrainian President Volodymyr Zelensky agreed to work on a U.S.-drafted peace plan. A deal would ease the geopolitical risk premium and concerns over Russian oil flows, boosting the supply outlook. In evening trading in Europe, Brent crude was around $62 a barrel, while West Texas Intermediate traded just below $60 a barrel.

MACRO: Traders boosted expectations that the Federal Reserve will cut interest rates further in December following more dovish comments from New York Federal Reserve President John Williams, who said he sees room for further adjustments in the near term. According to the FedWatch tool, traders are now pricing in a 71% chance of a December cut, up from 33% earlier on Friday. A lower interest-rate environment typically boosts economic activity and demand for oil.

Meanwhile, the latest U.S. data showed job growth defied expectations in September. Payrolls rose by 119,000 in the month, well above the gain of 50,000 jobs expected by economists, while the unemployment rate rose slightly to 4.4%.

GEOPOLITICAL RISKS: Renewed U.S. efforts to push for a Russia-Ukraine peace deal are weighing on crude, though market watchers remain skeptical that an agreement will be reached soon. Meanwhile, U.S. sanctions on Russian giants Lukoil and Rosneft came into effect on Friday.

"The implications of sanction relief agreed as part of any peace deal--and the reduced threat of future sanctions--for crude oil and natural gas markets will be limited to a reduction in risk premia, which appears to be small," said Hamad Hussain from Capital Economics.

Big importers of Russian crude, such as China and India, are now seeking to buy crude from elsewhere. However, this might be a temporary move rather than a permanent decision, according to analysts.

SUPPLY AND DEMAND: Concerns over excess supplies continue to weigh on the oil outlook. However, the latest Energy Information Administration report showed U.S. crude stocks fell by 3.4 million barrels against expectations of a 100,000-barrel rise.

NEXT WEEK: No major announcements are expected before the OPEC+ meeting on Nov. 30, particularly with the U.S. market closing early for Thanksgiving. Traders will closely watch geopolitical developments in Eastern Europe, particularly Russia's seaborne export flows.

"Going forward, markets will focus on how sanctions reshape trade flows, whether supply growth continues to outpace demand, and the extent to which geopolitical risks inject fresh volatility into prices," said Soojin Kim from MUFG.

Write to Giulia Petroni at [e-mail]

(END) Dow Jones Newswires

11-21-25 1317ET