Oil prices edge higher as US interest rates and Ukraine peace talks jostle for attention

Oil prices edged up on Monday as investors gave more weight to the chances of a U.S. interest rate cut over the prospect of a peace deal in Ukraine that could lead to an easing of sanctions on Russian oil.

Brent crude futures rose by 22 cents, or 0.4%, to $62.78 a barrel by 11:05 a.m. EST (1605 GMT), while West Texas Intermediate (WTI) crude gained 31 cents, or 0.5%, to $58.37.

Both benchmarks had closed on Friday at their lowest since October 21.

The United States and Ukraine sought on Monday to narrow the gaps in a peace plan to end the Russia-Ukraine war after a U.S. proposal that Kyiv and its European allies viewed as a Kremlin wish list.

Recent price weakness is driven mainly by reported progress in Ukraine–Russian peace negotiations, analysts at energy advisory firm Ritterbusch and Associates said in a note.

"However, we feel that a reduction of more than 5% of risk premium is excessive," they added, pointing to the potential for the war to drag on, reinjecting geopolitical risk into oil futures.

U.S. sanctions on Russian oil companies Rosneft  and Lukoil , which took effect on Friday, have caused friction that would normally boost prices, but the market is preoccupied by the peace talks, said Jorge Montepeque, managing director at Onyx Capital.