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Oil prices
The world weakened again on Friday (21/11), recording a decline for the third session in a row.
This is in line with the United States’ (US) push to immediately reach a peace agreement between Russia and Ukraine which has the potential to increase supply to the global market.
Quote
Reuters
, the price of Brent oil fell 93 cents or 1.5 percent to US$62.45 per barrel, after falling 0.2 percent in the previous session.Meanwhile, West Texas Intermediate (WTI) fell 1.7 percent or 98 cents to US$58.02 per barrel, after closing down 0.5 percent on Thursday (20/11).
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Both benchmark contracts are expected to fall more than 2.5 percent this week due to increasing concerns
oversupply
, erasing most of the price increases that occurred last week.
Market sentiment turned bearish after Washington pushed through a peace plan between Ukraine and Russia to end the three-year war.
At the same time, US sanctions against two major Russian oil producers, Rosneft and Lukoil, came into effect today.
“Oil extended its decline after Zelenskiy agreed to discuss a peace plan drafted by the US and Russia, while sanctions on two Russian oil giants will come into effect,” Saxo analysts wrote in a note to clients, referring to Ukrainian President Volodymyr Zelenskiy.
IG analyst Tony Sycamore said the chance of an agreement was small, but the existence of this possibility was enough to put pressure on oil prices.
“If approved, the agreement could eliminate geopolitical risks that have been a premium on oil prices,” he said.
However, some analysts still doubt the possibility of reaching an agreement in the near future.
“A deal is far from certain,” ANZ analysts wrote in a research note, noting that Kyiv had repeatedly rejected a number of Russian demands, hampering negotiations.
Apart from that, the market is also starting to be skeptical about the effectiveness of the new sanctions against Rosneft and Lukoil.Lukoil has been given until December 13 to offload its large international portfolio.
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