Oil prices were largely flat during Asian trading on Friday, consolidating gains from the previous session. Stalled diplomatic efforts to end the war in Ukraine, along with firm expectations of a U.S. rate cut, continued to support market sentiment. Brent crude futures for February eased slightly to $63.15 a barrel, while U.S. West Texas Intermediate (WTI) slipped to $59.30. Still, WTI is on track for a weekly gain of around 1.5%.
Failure in U.S.-Russia discussions to achieve progress toward a ceasefire reduced expectations that sanctions on Russian oil exports would be lifted any time soon, helping maintain a risk premium in prices. Meanwhile, recent Ukrainian strikes on Russian energy infrastructure renewed concerns over potential supply disruptions.
Monetary policy expectations have also underpinned market confidence. Investors are widely pricing in a 25-basis-point rate cut by the Federal Reserve next week, as signs of an economic slowdown in the U.S. become more evident. Although initial jobless claims have fallen to their lowest level since 2022, earlier data from ADP showed private payrolls unexpectedly declined by 32,000 in November, highlighting growing uncertainties in the labor market.
All eyes now turn to the upcoming U.S. Personal Consumption Expenditures (PCE) inflation report, the Fed’s preferred inflation gauge, which could further shape short-term interest rate expectations.