Nov 21 (Reuters) - Oil prices fell 1.5% on Friday, extending declines for a third straight session, as the United States pushed for a Russia-Ukraine peace deal that could swell global market supply, while uncertainty over its rate cuts curbed investors' risk appetite.
Brent crude futures fell 96 cents, or 1.5%, to $62.42 a barrel by 0730 GMT, after slipping 0.2% in the previous session. U.S. West Texas Intermediate was down 1.8%, or $1.03, at $57.97 a barrel, after ending Thursday down 0.5%.
Both contracts are set to fall more than 2.5% this week on oversupply concerns, erasing most of last week's gains.
Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, while sanctions on top Russian oil producers Rosneft and Lukoil are set to take effect on Friday.
"Oil extended declines as Zelenskiy agreed to work on a US- and Russia-drafted peace plan, with U.S. sanctions on two Russian oil majors due Friday," Saxo analysts said in a client note, referring to Ukrainian President Volodymyr Zelenskiy.
However, some analysts were sceptical just how soon a peace deal could be struck.
"An accord is far from certain," ANZ analysts told clients in a note, adding that Kyiv has repeatedly dismissed Russia's demands as unacceptable, hindering any breakthrough.
"The market is also becoming sceptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective."
Lukoil has until December 13 to sell its huge international portfolio.
A stronger dollar, amid weaker U.S. stocks performance, was also depressing oil prices, as the dollar-denominated commodity becomes more expensive for holders of other currencies.
"The oil market is likely to face several headwinds in the coming weeks," OANDA senior market analyst Kelvin Wong said in an email to Reuters.
He cited indirect downside pressure through a negative reflexivity feedback loop in the U.S. stock market after a bearish reversal in the benchmark S&P 500 index the previous day.
"The odds of the December Fed rate cut have been significantly reduced to 35% (according to the CME FedWatch tool) from around a chance of 90% a month ago ...(are) in turn, dampening the oil demand."
The dollar was on track for its best week in more than a month on Friday as investors wagered the Federal Reserve is unlikely to cut rates next month.
Reporting by Helen Clark and Trixie Yap; Editing by Lincoln Feast and Clarence Fernandez
Source: Reuters