Oil prices fell on Monday due to ongoing peace talks in Ukraine. If the US lifts its ban on Russian oil, global crude supply could increase by 2 million barrels per day. Meanwhile, discussions about federal rates are giving some support to oil prices, preventing them from dropping further right now. WTI Crude oil dropped from $60.00 to around $59.00, falling almost $1 for the day. Analysts are closely watching the peace discussions, as a resolution could allow Russian oil back into the market.

Positive Outlook Amid Uncertainty

Crude oil remains optimistic compared to late November lows near $57. Expectations of a rate cut by the Federal Reserve might boost demand in the US, helping to limit price declines. The EU and G7 are also contemplating a total ban on Western maritime services, which could reduce the market presence of Russian oil. WTI oil, known for its low gravity and sulfur content, is a quality crude from the US. Prices are mainly determined by supply and demand, influenced by global growth, political events, and OPEC’s choices. Reports from API and EIA also impact prices by shedding light on the supply-demand balance. Today, December 8th, 2025, WTI crude prices are dropping from the $60 mark to about $59. This shift stems from mixed market signals. Traders should remain cautious as the potential peace in Ukraine contrasts with expectations of a supportive Federal Reserve. The biggest pressure on oil prices comes from ongoing peace negotiations. If successful, these talks could lift US restrictions on Russian oil, adding over 2 million barrels per day to global supply. This possibility is a major reason for the recent price decrease and will be an important factor to monitor in the coming days.

Market Movements and Geopolitical Updates

Conversely, the market is anticipating a high likelihood of a Federal Reserve rate cut this Wednesday. According to the CME FedWatch Tool, there is over an 80% chance of a quarter-point reduction, which could boost the US economy and increase oil demand. This expectation is what helped support prices from their late November lows near $57. Adding to the complexity is a new geopolitical development. The EU and G7 are considering a full ban on Western maritime services for Russian crude, making it harder for their oil to enter markets. This would tighten global supply and counter any potential increases from a peace deal. Traders should keep an eye on weekly inventory reports, with data from the EIA set to be released this Wednesday. Last week, there was an unexpected drawdown of 3.2 million barrels when a slight build was forecast, suggesting strong underlying demand. Another significant draw could push prices back to the $60 resistance level. Given these conflicting factors, we can anticipate significant price fluctuations. This environment is favorable for options strategies, as a major news event regarding either Ukraine or the Federal Reserve could lead to sharp price movements. Traders might explore strategies that benefit from large swings, regardless of which way prices move. Reflecting on past events, we saw similar uncertainty when the G7 price cap on Russian oil was first introduced in late 2022, leading to weeks of volatile trading. The current situation hints at a similar period of instability, making it wise to hedge both long and short positions. The key is to be ready for a breakout from the current range. Create your live VT Markets account and start trading now.

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