Oil prices head for 2% weekly gain as Fed hopes boost market, Venezuela tensions loom

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By Colleen Howe

BEIJING, Dec 5 (Reuters) – WTI oil prices were heading for weekly gains of close to 2% in early trading on Friday, supported by an expected Federal Reserve interest rate cut, escalating U.S.-Venezuela tensions and stalled peace talks in Moscow.

It would be a second straight week of increases.

Prices were little changed at market open on Friday, with Brent crude up 6 cents, or 0.09%, at $63.32 per barrel by 0104 GMT. U.S. West Texas Intermediate was up 4 cents, or 0.07%, at $59.71 a barrel. 

Both contracts settled up around 1% in the previous trading session.

Of economists surveyed in a November 28-December 4 Reuters poll, 82% expected a 25-basis-point interest rate reduction at next week’s Federal Reserve policy meeting. A rate cut would stimulate economic growth and demand for oil.

Markets continued to brace for a potential U.S. military incursion into Venezuela after President Donald Trump said late last week that the U.S. would start taking action to stop Venezuelan drug traffickers on land “very soon”.

Rystad Energy said in a note that such a move could put at risk Venezuela’s 1.1 million barrels per day of crude oil production, which it supplies mostly to China.

Prices were also boosted this week by the failure of U.S. talks in Moscow to achieve any significant breakthroughs over the war in Ukraine, which could have included a deal to let Russian oil back into the market.

Those factors kept prices supported despite a growing surplus.

Saudi Arabia cut its January Arab Light crude selling prices to Asia to the lowest level in five years amid oversupply, according to a document reviewed by Reuters on Thursday.