OIL FUTURES: Crude prices fall amid progress in Russia-Ukraine peace talks

Crude oil futures declined in midafternoon trading in Asia on April 29, as progress in Russia-Ukraine peace negotiations fueled expectations of a potential surge in supply.

At 3:55 pm Singapore time (0755 GMT), the ICE June Brent futures contract fell 91 cents/b (1.38%) day over day to $64.95/b, while the NYMEX June light sweet crude contract was down 83 cents/b (1.34%) from the previous close at $61.22/b.

"While uncertainty surrounds demand, projections for supply [are] thriving, particularly with the potential for peace in Ukraine and Russia. A resolution in this conflict could lead to lifted sanctions and a smoother flow of Russian oil into global markets," Priyanka Sachdeva, senior market analyst at Phillip Nova, said.

Developments in US-Iran nuclear discussions also showed promise, with regional media reports suggesting that a new round of talks could take place in Europe on May 3.

Iranian diplomats indicated that a meeting with European parties could take place May 2 if negotiations with the US resume, according to regional media.

"[These developments] could lead to increased availability of Iranian oil," Sachdeva said.

Combined with demand concerns, an expected supply glut alongside weak demand presents a potential downside risk for crude oil futures.

"US oil rigs are [also] operating at record levels, ensuring steady production and contributing to downward pressure on oil prices. ... Markets seem broadly to have acclimatized to trade wars and the changing economic equation between the US and China, which is bound to hurt the global economy and, in turn, the demand for fuel," Sachdeva added.

Conversely, a reprieve in US President Donald Trump's tariff measures could cap losses in crude oil prices, though analysts noted that the unpredictability of these tariffs continues to contribute to market uncertainty.

"It feels like he has been obliged to slow down the pace and intensity of his attacks. The bad news is, there is no clarity regarding the tariff situation, and the best outcome would be that the US keeps the 10% tariffs for everyone, even if negotiations go well and lead to a favorable outcome," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

Notably, US consumer sentiment dropped to a record low, with long-term inflation expectations rising to their highest level since 1991, according to analysts.

The US Michigan Consumer Sentiment Index was revised upward to 52.2 for April, the latest data from the University of Michigan showed. Despite the upward revision, consumer sentiment declined for the fourth consecutive month and was last lower in June 2022.

"The US economy has certainly taken an unnecessary hit from tariff uncertainty, as GDP [gross domestic product] is expected to have dropped from 2.4% to 0.4% in just three months. ... The stock markets print their worst 100 days of a president since 1974 while the US dollar is losing its safe haven and reserve demand." Ozkardeskaya said.

Dubai crude

Dubai crude swaps and intermonth spreads were lower in midafternoon trading in Asia on April 29 from the previous close.

The June Dubai swap was pegged at $64.09/b at 2:00 pm Singapore time (0600 GMT), down $1.57/b (2.39%) from the previous Asian market close.

The May-June Dubai swap intermonth spread was pegged at 73 cents/b, narrowing 12 cents/b day over day, and the June-July Dubai swap intermonth spread was pegged at 43 cents/b, narrowing 6 cents/b over the same period.

The June Brent-Dubai exchange of futures for swaps was pegged at $1.11/b, narrowing 6 cents/b from the previous close.