Oil prices edged higher Tuesday as investors reacted to prospects for diplomatic progress in Ukraine and anticipated potential monetary easing from the Federal Reserve.
crude futures gained ground amid optimism following news that US envoy Steve Witkoff will lead a delegation to Moscow next week for discussions with Russian leaders regarding a potential plan to resolve the nearly four-year conflict. A resolution to the war could stabilize global supply chains and ease geopolitical risk premiums embedded in oil prices. Concurrently, expectations are building that the Federal Reserve may lower interest rates at its December meeting, a move historically linked to increased economic activity and heightened demand for oil.
Kelvin Wong, chief market analyst at OANDA, cautioned that liquidity is diminishing as the year closes. He stated, “We are approaching the end of the year with less liquidity and no new stimulus unless the Federal Reserve surprises markets with a move toward monetary tightening at the Federal Open Market Committee meeting on December 10.” Wong forecasts US West Texas Intermediate crude oil will trade between $56.80 and $60.40 per barrel through year-end.
