Oil Rallies on Fed Rate-Cut Bets While Peace Talks Add Uncertainty

Crude oil jumped 1.26% to $58.79/barrel Monday, riding the coattails of a Wall Street rally fueled by expectations of near-term Fed rate cuts. Fed officials John Williams and Christopher Waller both signaled openness to December cuts due to labor market concerns—a classic recipe for risk-on sentiment and energy demand optimism.

The Good: Weaker labor data = lower rates = cheaper borrowing = more economic growth = more oil consumption. Simple math, and the market’s buying it.

The Wrinkle: Trump’s peace proposal for Russia-Ukraine is gaining traction. U.S. and Ukraine negotiators announced yesterday they’re “closing in on a revised framework,” with Trump hinting “something good just may be happening.” If this sticks, sanctions on Russian oil could lift, flooding the market with additional supply and crushing prices.

The Headwinds:

• Dollar strength still acting as a brake
• OPEC+ targeting higher production regardless
• China, India, and Turkey already shifting away from Russian oil due to Trump’s tariff threats
• Supply overhang concerns persist

Bottom Line: Oil’s stuck between two narratives—demand optimism from rate cuts vs. supply risk from potential peace. The $58-59 range could be a holding pattern until either the Fed commits or the Ukraine talks crystallize. Watch Fed speakers this week and any Trump tweets on the peace deal.