Oil prices rose about 1% on Monday as rising bets on US interest rates in December offset the prospect of a peace deal in Ukraine that could lead to the easing of sanctions on Russian oil.

Brent crude futures rose 78 cents, or 1.3%, to $63.34 a barrel at 2:14 p.m. EST (19:14 GMT), while West Texas Intermediate (WTI) crude rose 77 cents, or 1.3%, to $58.83. Both benchmarks closed Friday at their lowest levels since October 21.

Federal Reserve Chairman Christopher Waller said on Monday that available data suggests the US labor market remains weak enough to justify another quarter-point interest rate cut, although further action will depend on the volume of data from US statistical agencies that follows the end of the government shutdown.

Lower interest rates can boost economic growth and oil demand by reducing borrowing costs for consumers and businesses.

Global traders remain divided over whether the Fed will cut interest rates at its December meeting after mixed signals last week regarding job growth and unemployment clouded the economic outlook.

Separately, US President Donald Trump said he had a "very good" phone call with Chinese President Xi Jinping on Monday, during which the two leaders discussed the war in Ukraine, the fentanyl trade, and a deal for farmers.

Energy traders view any positive discussions between the world's two largest economies – the US and China – as supportive of economic growth and oil demand.

RUSSIA-UKRAINE WAR

The United States and Ukraine on Monday sought to narrow the gap in a peace plan to end the Russia-Ukraine war after a US proposal that Kyiv and its European allies viewed as a Kremlin wish list.

The recent price weakness was primarily driven by reports of progress in Ukraine-Russia peace negotiations, analysts at energy advisory firm Ritterbusch and Associates said in a note.

"However, we feel a reduction in the risk premium of more than 5% is excessive," they added, pointing to the potential for a protracted war, which would inject geopolitical risk back into oil futures prices.

US sanctions on Russian oil companies Rosneft and Lukoil, which took effect on Friday, have caused tensions that would normally boost prices, but the market is preoccupied with peace talks, said Jorge Montepeque, managing director at Onyx Capital.

Russian state oil and gas revenues could fall by about 35% year-on-year in November to 520 billion rubles ($6.59 billion), due to cheaper oil prices and a stronger ruble, according to Reuters calculations on Monday.

European Council President Antonio Costa praised "new momentum" in negotiations to end the war in Ukraine and pledged that the European Union would continue to support Ukraine.

Elsewhere in the world, the United States on Monday formally designated Venezuela's Cartel de los Soles as a foreign terrorist organization, imposing additional terrorism-related sanctions on the group that it said includes President Nicolas Maduro and other top officials.

US sanctions against Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), have helped prop up oil prices by restricting the South American nation's exports.

Meanwhile, in Germany, business morale unexpectedly fell in November, a survey showed on Monday, as companies became more pessimistic about the chances of a German economic recovery after two years of contraction.

JPMorgan forecasts Brent crude prices at $57 per barrel and WTI at $53 in 2027, while its forecasts for 2026 remain unchanged at $58 and $54. (alg)

Source: Reuters