Khaberni - U.S. West Texas Intermediate crude prices today, Friday, are heading to achieve weekly gains, supported by expectations of a Federal Reserve (U.S. central bank) interest rate cut and escalating tensions between the United States and Venezuela.
Today's oil price
Brent crude fell by three cents, or 0.05%, to $63.23 a barrel by 0745 GMT. It has been largely stable over the week.
U.S. West Texas Intermediate crude fell 10 cents, or 0.17%, to $59.57 a barrel despite rising by about 1.7% during the week, heading for its second consecutive weekly rise.
Ann Fam, a researcher specialized in the London Stock Exchanges group, said, "The market is assessing the impact of reduced exports from the Caspian Pipeline Consortium and some positive news on the demand side, with the possibility that the Federal Reserve will cut interest rates," referring to a decrease in shipments from Kazakhstan after a Ukrainian drone attack on a Black Sea loading facility belonging to the Caspian Pipeline Consortium.
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Both oil contracts settled with about a 1% increase in the previous trading session.
American Interest Rate Cut
An overwhelming 82% of a group of economists surveyed by Reuters between November 28 and December 4 believe that the U.S. central bank will cut the interest rate by 25 basis points in next week's monetary policy meeting. Such an interest rate cut would stimulate economic growth and oil demand.
Fam added, "Looking ahead, supply factors remain the focus. A peace deal with Russia would lead to increased supply in the market, likely pushing prices down."
He continued, "On the other hand, any geopolitical escalation will push prices up. OPEC+ has agreed to maintain production until the start of next year, which also supports prices."
The markets remain on alert for the possibility of the U.S. military advancing into Venezuela after President Donald Trump said late last week that the United States would "very soon" begin ground actions to stop Venezuelan drug traffickers.
Rystad Energy said in a note that such a move could jeopardize Venezuela's crude oil production of 1.1 million barrels per day, most of which is supplied to China.
Prices also received support this week from the failure of American talks in Moscow to achieve any significant breakthrough regarding the war in Ukraine, which could have included an agreement allowing Russian oil back into the market.
These factors led to price support despite the growing surplus.
A document reviewed by Reuters yesterday, Thursday, showed that Saudi Arabia has reduced the January sale price of its light Arab crude to Asia to its lowest level in five years amid abundant supply.
