Oil prices held steady on Thursday amid investor expectations that the Federal Reserve would cut interest rates, while stalled Ukraine peace talks dampened hopes of a deal to restore Russian oil flows.

Brent crude closed up 59 cents, or 0.94%, at $63.26. U.S. West Texas Intermediate crude closed up 72 cents, or 1.22%, at $59.67. U.S. crude futures rose more than $1 per barrel earlier in the session, boosted by expectations that a U.S. interest rate cut would support the world's largest economy and oil demand, after data showed a slowdown in employment.

The dollar weakened, poised to post a 10th straight day of losses against a basket of major currencies, making crude cheaper for buyers using other currencies. "I think the potential for a rate cut is looming large right now and pushing crude prices higher," said Phil Flynn, senior analyst at Price Futures Group.

Escalating tensions between the US and Venezuela are also supporting prices, analysts said, amid concerns about a decline in crude oil supplies from the South American country. "Benchmark crude oil prices could be significantly impacted by escalating military tensions between the US and Venezuela," Rystad Energy analysts said in a note on Thursday, noting that the Trump administration is increasing pressure on Venezuelan President Nicolás Maduro, "signaling the possibility of US intervention."

UKRAINE PEACE TALKS STALL

Perceptions that progress on a peace plan for Ukraine is stalled also supported prices, after Trump's representatives walked away from peace talks with the Kremlin without a breakthrough on ending the war. "War and politics, coupled with comfortable stocks, an expected supply surplus, and OPEC's market share strategy, are keeping Brent in the $60-$70 range for now," PVM analysts said.

Previously, expectations of an end to the war had pushed prices lower, as traders anticipated a deal would allow Russian oil to return to the oversupplied global market.

Ukraine attacked the Druzhba oil pipeline in the Tambov region of central Russia, a Ukrainian military intelligence source said on Wednesday, the fifth attack on a pipeline carrying Russian oil to Hungary and Slovakia. The pipeline operator and Hungarian oil and gas companies later said supplies were moving through the pipeline as usual.

"Ukraine's drone campaign against Russian refining infrastructure has shifted to a more sustained and strategically coordinated phase," consultancy Kpler said in a research report. "This has pushed Russian refinery production down to around 5 million barrels per day between September and November, a decrease of 335,000 barrels per day compared to a year earlier, with gasoline being the hardest hit and diesel production also weakening materially," the report added.

U.S. crude oil and fuel inventories rose last week as refinery activity increased, the Energy Information Administration (EIA) said on Wednesday.

Crude oil inventories rose by 574,000 barrels to 427.5 million barrels in the week ending November 28, according to the EIA, compared with analysts' expectations in a Reuters poll for a production decline of 821,000 barrels.

Fitch Ratings on Thursday cut its 2025-2027 oil price assumptions to reflect market oversupply and expected production growth to outpace demand.

Saudi Arabia set its official selling price for Arab Light crude for January to Asia at $0.60 per barrel above the Oman/Dubai average, a five-year low, according to pricing documents reviewed by Reuters.

Meanwhile, Kazakhstan's oil and gas condensate production fell 6% in the first two days of December, an industry source said on Thursday, following a Ukrainian drone attack on a Black Sea loading facility belonging to the Caspian Pipeline Consortium (CPC). (alg)

Source: Reuters.com