Oil prices tumbled on Friday as renewed hopes of a peace deal between Russia and Ukraine raised expectations that this could lead to increased supply on the market.
Brent crude (BZ=F) futures fell 1.5% to $62.45 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) rose 1.7% to $58.01 a barrel.
Oil prices extended falls from the previous session, following reports that the US and Russia had drafted a plan to end the war in Ukraine.
According to multiple reports, proposals in the plan include Ukraine making major territorial and military concessions.
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In an address on Thursday evening, Ukrainian president Volodymyr Zelensky reportedly said US military officials in Kyiv had “presented its proposals, the points of a plan to end the war – their vision”.
“From the first days of the war, we have upheld one very simple position: Ukraine needs peace,” he said, according to a BBC report. “A real peace – one that will not be broken by a third invasion.”
These latest developments come as US sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, are due to come into effect on Friday.
In a note on Thursday, ING head of commodities strategy Warren Patterson and commodities strategist Ewa Manthey said: “Signs that the US is still trying to work on a deal eases some concerns over further sanctions against Russia and also how strongly current curbs will be enforced.”
Gold prices also ebbed lower on Friday morning, as a mixed US jobs report further clouded expectations as to whether the Federal Reserve will cut interest rates in December.
The US economy added 119,000 positions in September, data released by the Bureau of Labor Statistics (BLS) on Thursday showed, which was delayed due to the government shutdown. This was higher than the expected a gain of around 50,000 positions, according to data from Bloomberg.
At the same time, the US rate of unemployment crept up to 4.4% in September from 4.3% in the previous month and was the highest level since October 2021.
Jobs data is closely watched by the Fed, as it tries to balance using higher interest rates to get inflation under control while also avoiding too much of a slowdown in the economy.
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Neil Wilson, UK investor strategist at Saxo Markets, said that the strong job growth in September “reinforced expectations of unchanged Fed rates in December”.