Oil prices settle up in low volume on US holiday; Russia-Ukraine talks in focus

By Shariq Khan and Ahmad Ghaddar

NEW YORK/LONDON (Reuters) -Oil prices rose on Thursday as market participants weighed the likelihood that talks to end the war in Ukraine will yield an agreement, with trading volume thin due to the Thanksgiving holiday in the U.S.

Brent crude futures settled up 21 cents, or 0.2%, at $63.34 a barrel. U.S. West Texas Intermediate crude futures were up 45 cents, or 0.8%, at $59.10 a barrel by 1:46 p.m. ET (1846 GMT).

The market is swinging between hope and skepticism over renewed peace efforts in Ukraine, SEB commodities analyst Ole Hvalbye said.

U.S. and Ukrainian delegations are to meet this week to work out a formula discussed at talks in Geneva to bring peace and provide security guarantees for Kyiv, Ukrainian President Volodymyr Zelenskiy said.

The two sides have been trying to narrow gaps over President Donald Trump's plan to end Europe's deadliest conflict since World War Two. Kyiv remains wary of accepting a deal largely on Russian terms, including territorial concessions.

Russian President Vladimir Putin said the outlines of a draft peace plan discussed by the U.S. and Ukraine could become the basis of agreements to end the war. Putin also said that once Ukrainian troops withdraw from key areas, the fighting will stop, but Russia will achieve its objectives by force if that does not happen.

"Geopolitical volatility continues and hopes of a potential ceasefire between Russia and Ukraine have neutralized the supply concerns arising from new U.S. sanctions on key Russian producers," Barclays said in a note.

Meanwhile, the Organization of the Petroleum Exporting Countries and allies are likely to leave oil output levels unchanged at their meetings on Sunday and to agree on a mechanism to assess members' maximum output capacity, two delegates from the group and a source familiar with OPEC+ talks told Reuters. 

Eight OPEC+ countries, which have been gradually raising production in 2025, are expected to keep their policy to pause hikes in the first quarter of 2026 unchanged, the two delegates said.

Crude prices were also supported by rising expectations for a U.S. Federal Reserve interest rate cut in December. A lower rate typically stimulates economic growth and bolsters demand for oil.

"We are now approaching the year-end with thinner liquidity without any new drivers unless the Fed surprises the markets with a hawkish guidance on the 10 December FOMC meeting," said OANDA senior market analyst Kelvin Wong. 

"WTI crude is likely to be range-bound between US$56.80 and US$60.40 till year-end," he said.

(Additinoal reporting by Enes Tunagur, Yuka Obayashi and Trixie Yap; Editing by Louise Heavens, Emelia Sithole-Matarise, Leslie Adler and David Gregorio)