View: Cautiously Bullish
Target Price: $63-65/bb
Front-month Jan’26 Brent futures fell to a 1-month low last week amid easing geopolitical tensions, where the market saw a bearish reaction upon a renewed push towards a peace deal and ceasefire in Ukraine by the US. On Friday 21 November, front-month Brent closed at $62.44/bbl and reached intraday lows of $61.87/bbl. We expect Feb’26 Brent (Jan’26 expires on 28 Nov) to tick higher towards the $63-65/bbl range by the end of the week.
- Ceasefire Talks in the Russo-Ukrainian War
- Technical Support
- Increased Chance of Fed Rate Cut in December
Ceasefire Talks in the Russo-Ukrainian War
The Russo-Ukrainian war returned to the headlines last week following a leaked report of Trump’s 28-point peace plan for Ukraine. The bearish reaction in crude suggests the market views this development as significant, reflecting rising optimism that the nearly four-year conflict may be approaching an end. However, the situation remains fluid, and there were further discussions over the weekend between US, Ukrainian and European officials, where the latter sides publicly pushed back against the initial plan, which was viewed as more favourable to Russia.
The key points of contention include territorial concessions, security guarantees, Russian frozen assets, general amnesty, and the size of Ukraine’s army. With mixed signals from Washington, there remains plenty of uncertainty ahead of the Thursday deadline imposed by Trump, with Secretary of State Marco Rubio saying that “obviously, we would love it to be Thursday”, and that Russia would also need to approve the plan. As developments continue to unfold, sensitivity to headlines may increase, especially around comments from key leaders and any indications that a peace agreement is drawing nearer.
Technical Support
From a technical basis, Brent crude may see some support in the short-term as bearish momentum wanes. The past sessions saw Brent find support at the $62/bbl handle, aligning with the lower Bollinger band, and is on track for a higher close on Monday 24 November. Prices also found support here around 10-15 October.
Stochastics is near oversold territory, which suggests that the recent sell-off may be losing steam as prices stabilise and attempt a short-term rebound. We note that volatility is declining despite last week’s bearish price action, given the lower ATR and narrowing Bollinger bands. On the downside, Brent is close to the key $60/bbl psychological support level, but prices face formidable resistance at the 50-day moving average ($64.77/bbl) on the upside.
Increased Chance of Fed Rate Cut in December
Risk assets saw some respite last week following comments by the Fed’s John Williams that he sees room to lower interest rates in the near term amid a softening labour market. As the overnight index swap (OIS) market indicates, investors boosted the odds of a rate cut from 33% to 77%, while equities pared back some losses from earlier in the week.
The president of the New York Fed has traditionally been closely aligned with the Fed chair, and Jerome Powell is not scheduled to speak publicly before the next meeting, so investors have put more weight to William’s words. A slew of US economic data is set to be released this week, including US PPI, retail sales, jobless claims, PCE inflation, and investors will be watching closely for clues on the Fed’s next move, which could influence risk assets such as oil.
