Oil prices fell sharply and the broader market plunged, with signs of progress in peace talks between Ukraine and Russia bolstering expectations that Moscow's supplies would remain available.

West Texas Intermediate crude futures fell as much as 2.6% in New York as equities weakened, led by a decline in major technology stocks. The commodity fell earlier after ABC News reported that Kyiv had agreed to the terms of a revised peace deal aimed at ending Russia's nearly four-year war in the country.

Ukrainian President Volodymyr Zelenskiy said negotiations on a peace plan with the US were continuing. Several key points remain to be resolved between the US and Ukraine, including the most thorny issues, according to a person familiar with the matter. Russia's position on the plan remains unclear. Moscow and Ukraine launched airstrikes overnight.

An end to the war would have significant implications for the oil market. Russia is one of the world's top producers and its oil output is under heavy sanctions from the US, the European Union, and the UK. In October, the US announced new sanctions against its two major producers. However, it is far from certain that Russia will accept the revised peace plan, which trimmed several points from the initial proposal following input from European officials.

"Trade volumes are expected to decline over the next few days as the US prepares for the long Thanksgiving weekend," said Keshav Lohiya, founder of consultancy HiLo Analytics. "The main pessimistic news ahead of Thanksgiving is the push to finalize the Ukraine-Russia peace deal."

Ukrainian drone attacks on Russian refineries have also hampered the flow of refined fuel, causing prices to spike in recent weeks.

Any increase in Russian oil volumes will only add to the oversupply in a market that the International Energy Agency predicts will head for a record annual surplus next year. Producers within and outside the Organization of the Petroleum Exporting Countries (OPEC) and its allies have been ramping up production in recent months, increasing supply faster than demand growth. Oil prices have fallen this year and are expected to experience a fourth monthly decline. (alg)

Source: Bloomberg.com