By Scott DiSavino
NEW YORK (Reuters) -Oil prices climbed about 1% on Monday as increased bets on a U.S. interest rate in December offset the prospect of a peace deal in Ukraine that could lead to an easing of sanctions on Russian oil.
Brent futures rose 78 cents, or 1.3%, to $63.34 a barrel by 2:14 p.m. EST (1914 GMT), while West Texas Intermediate (WTI) crude gained 77 cents, or 1.3%, at $58.83.
Both benchmarks had closed on Friday at their lowest level since October 21.
Federal Reserve Governor Christopher Waller said on Monday that available data indicates that the U.S. job market remains weak enough to warrant another quarter-point cut, though action beyond that will depend on a flood of data from U.S. statistical agencies catching up after the end of the government shutdown.
Lower interest rates could boost economic growth and oil demand by reducing borrowing costs for consumers and businesses.
Global brokerages remain split on whether the Fed will cut interest rates at its December meeting after last week’s mixed signals on job growth and unemployment clouded the economic outlook.
Separately, U.S. President Donald Trump said he had a “very good” phone call with Chinese President Xi Jinping on Monday, during which the leaders discussed the war in Ukraine, fentanyl trafficking and a deal for farmers.
Energy traders see any positive discussions between the world’s two biggest economies – the U.S. and China – as supportive of economic growth and oil demand.
RUSSIA-UKRAINE WAR
The United States and Ukraine sought on Monday to narrow the gaps in a peace plan to end the Russia-Ukraine war after agreeing to modify a U.S. proposal that Kyiv and its European allies viewed as a Kremlin wish list.
Recent price weakness was driven mainly by reported progress in Ukraine–Russian peace negotiations, analysts at energy advisory firm Ritterbusch and Associates said in a note.
“However, we feel that a reduction of more than 5% of risk premium is excessive,” they added, pointing to the potential for the war to drag on, re-injecting geopolitical risk into oil futures.
U.S. sanctions on Russian oil companies Rosneft and Lukoil, which took effect on Friday, have caused friction that would normally boost prices, but the market is preoccupied by the peace talks, said Jorge Montepeque, managing director at Onyx Capital.
Russian state oil and gas revenue could fall in November by around 35% year-on-year to 520 billion roubles ($6.59 billion), owing to cheaper oil and a stronger rouble, Reuters calculations showed on Monday.
European Council President Antonio Costa hailed the “new momentum” in negotiations to end the war in Ukraine and pledged that the European Union will keep supporting Ukraine.
Elsewhere around the world, the United States on Monday formally designated Venezuela’s Cartel de los Soles as a foreign terrorist organization, layering additional terrorism-related sanctions on the group it has said includes President Nicolas Maduro and other high-ranking officials.
U.S. sanctions on Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), help support oil prices by limiting the South American country’s exports.
In Germany, meanwhile, business morale fell unexpectedly in November, a survey showed on Monday, as companies become more pessimistic about the chances of German economic recovery after two years of contraction.
JPMorgan forecast Brent crude at $57 a barrel and WTI at $53 in 2027 while keeping its 2026 estimates unchanged at $58 and $54 respectively.
(Reporting by Scott DiSavino in New York and Anna Hirtenstein in London; Additional reporting by Mohi Narayan in New Delhi and Helen Clark in Perth; Editing by David Goodman and Richard Chang)
