Oil supported amid Ukraine peace talks and Fed rate expectations
USOIL Analysis
After posting its first back-to-back weekly gains of the quarter, USOil is attempting to maintain momentum and extend its rebound above the 200-day EMA, supported by expectations of Federal Reserve easing and ongoing uncertainty surrounding Ukraine.
Markets are pricing in a Fed rate cut on Wednesday, with CME's FedWatch Tool assigning an 87% probability to such an outcome . A run of weak employment data, a benign core PCE reading, and recent dovish remarks from key Fed officials have shaped these expectations, boosting optimism about the US economy and helping to temper concerns over oil demand.
Meanwhile, negotiations to end the war in Ukraine have yet to succeed. Ukrainian President Zelenskyy described the talks with American envoys as "constructive", though "not easy" , while US President Trump expressed disappointment that the Ukrainian leader had not yet reviewed the latest proposal . The ongoing conflict and broader geopolitical uncertainty continue to pose risks to oil supply. The recent OPEC+ decision to refrain from increasing output in the first quarter of next year is also supportive for crude prices.
However, broader supply demand dynamics remain unfavourable, keeping USOil vulnerable to the 2025 lows (56.33). The International Energy Agency (IEA) still expects a supply glut and has recently cut its 2026 consumption outlook again while raising its supply forecast.
Trump's tariffs continue to weigh on global economic activity and oil consumption, while persistent inflation and a data gap from the government shutdown pose hurdles for more Fed easing. On the supply side, the diplomatic push for a Ukraine peace continues, and a successful outcome could unlock Russian crude and exacerbate fears for an oversupplied market.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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