Oil prices edged higher on Friday, but were on track to post a second consecutive weekly decline, as expectations of a potential supply surplus and prospects for a peace deal between Russia and Ukraine capped gains, despite concerns over possible supply disruptions linked to a blockade of Venezuelan oil tankers.

By 12:30 GMT, Brent crude futures rose 25 cents, or 0.4%, to $60.07 a barrel, while US West Texas Intermediate crude gained 20 cents, or 0.4%, to $56.35 a barrel.

On a weekly basis, Brent and WTI were down 1.7% and 1.9%, respectively.

Analysts widely expect a global oil supply surplus next year, driven by higher output from the OPEC+ producer group, alongside the United States and other producers.

Ole Hansen, head of commodities strategy at Saxo Bank, said: “Staying at these low levels suggests the market is currently well supplied. There is enough oil available to absorb any potential disruptions.”

Tony Sycamore, an analyst at IG, said on Friday that uncertainty over how the United States would implement President Donald Trump’s intention to prevent sanctioned tankers from entering or leaving Venezuela has helped restrain geopolitical risk premiums.

Sources familiar with Venezuelan oil exports said that Venezuela, which produces about 1% of global oil supply, allowed two non-sanctioned cargoes to sail toward China on Thursday.

Optimism over the possibility of a US-led peace agreement on Ukraine has also helped ease supply risk concerns, according to Sycamore.

By contrast, analysts at Bank of America said they expect low oil prices to curb supply growth, which could prevent prices from entering a sharp and disorderly downward trajectory.

The yen slipped in choppy trading on Friday after the Bank of Japan delivered a widely expected interest rate hike, while Governor Kazuo Ueda offered limited guidance on the timing of future increases, even as he kept the door open to further monetary tightening.

The yen initially weakened against the dollar after the Bank of Japan raised its policy rate to 0.75% from 0.5%, a move that had been clearly signaled by policymakers, prompting traders to sell the currency on the news.

Losses in the Japanese currency deepened following Ueda’s post-meeting press conference, where he remained vague about the precise timing and pace of future rate hikes. In its latest trading, the yen was down 0.6% at 156.53 per dollar.

The euro climbed to a record high of 183.25 yen, while sterling rose 0.52% to 209.16 yen.

In a statement on Friday, the Bank of Japan maintained its view that core inflation will converge toward its 2% target in the second half of the three-year forecast period through fiscal year 2027.

However, two more hawkish board members, Hajime Takata and Naoki Tamura, dissented. Takata said core inflation had already reached the target, while Tamura argued it would do so earlier, around the middle of the three-year outlook period.

Bart Wakabayashi, head of Tokyo trading at State Street, commented on the Bank of Japan’s decision earlier on Friday, saying: “It feels like there is an ongoing debate, and the market reaction we’re seeing, in my view, is really about the Bank of Japan’s next steps… It doesn’t look like they have fully made up their minds about another hike.”

He added: “I think there is some consensus that 1% or 1.25% is roughly the neutral rate at this stage, but it appears the path for the Bank of Japan to get there will be a bit steeper.”

The Bank of Japan reiterated that real interest rates remain at “significantly low” levels even after the hike, and pledged to continue tightening if economic and inflation conditions evolve in line with its projections.

Euro steadies as Lagarde pushes back against hawkish pressure

Overnight, the dollar briefly weakened following a sharp and unexpected drop in US inflation, but investors questioned the reliability of the data due to disruptions caused by the US government shutdown, and the move quickly faded.

Sterling swung between gains and losses before settling at $1.3374, after the Bank of England cut interest rates to 3.75% as expected. However, the decision was passed by a narrower majority than markets had anticipated, potentially limiting the scope for further easing.

The euro was steady at $1.1719 in Asian trading, after European Central Bank President Christine Lagarde refrained from offering forward guidance and said all options remained on the table, a stance that markets interpreted as a pushback against more hawkish voices.

Analysts at ANZ said in a note to clients: “In recent weeks, hawkish comments from ECB executive board member Schnabel have shifted the market’s assessment of future policy risks. But the balanced tone suggests that Schnabel’s view that the next move is more likely to be a rate hike does not have broad support within the council.”

The ECB kept its policy rate unchanged at 2%, in line with expectations.

On the political front, European Union leaders agreed on Friday to borrow funds to finance Ukraine’s defense against Russia over the next two years, instead of using frozen Russian assets, sidestepping disagreements over an unprecedented plan to fund Kyiv with Russian sovereign money.

Norway and Sweden hold rates steady

The Norwegian krone slipped slightly to 10.18 per dollar after the central bank kept interest rates unchanged at 4% and signaled it was in no rush to cut them. The Swedish krona showed little reaction after rates were also left unchanged, as expected.

The Australian dollar fell 0.2% to $0.6601, while the New Zealand dollar declined 0.5% to $0.5748.

The Chinese yuan remained firm in onshore trading, hovering near a more-than-one-year high reached on Thursday. The dollar index rose 0.2% to 98.64.

Cryptocurrencies rebounded on Friday, with bitcoin up 2.5% at $87,752.22, while ether climbed more than 4% to $2,951.26.

Gold prices fell in European trading on Friday, extending losses for a second consecutive day and pulling back from a two-month high, amid corrective moves and profit-taking, in addition to pressure from the stronger US dollar against a basket of global currencies.

Despite a slowdown in US consumer price inflation that came in below expectations in November, markets are still ruling out an interest rate cut by the Federal Reserve at its January meeting.

Price overview

• Gold prices today: Gold declined by around 0.55% to $4,309.39, from the opening level of $4,332.72, and recorded a session high at $4,336.95.

• At Thursday’s settlement, gold prices lost about 0.15% due to corrective moves and profit-taking, after earlier touching a two-month high of $4,374.66 per ounce.

US dollar

The dollar index rose by 0.1% on Friday, maintaining gains for the third consecutive session, reflecting continued strength in the US currency against a basket of major and secondary currencies.

Beyond buying from lower levels, the dollar is also benefiting from easing inflationary pressures at some global central banks, reinforcing expectations of continued monetary easing and interest rate cuts.

US interest rates

• US consumer prices rose by 2.7% year on year in November, below economists’ expectations of a 3.1% increase, after prices had risen by 3.0% in October.

• Following the data, and according to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the January 2026 meeting eased from 75% to 73%, while pricing for a 25-basis-point rate cut rose from 25% to 27%.

• Investors are currently pricing in two US rate cuts over the coming year, while Federal Reserve projections point to only one 25-basis-point cut.

• To reassess these expectations, investors are closely monitoring upcoming US economic data, along with comments from Federal Reserve officials.

Gold outlook

• Tim Waterer, chief market analyst at KCM Trade, said that the slowdown in US inflation has been a double-edged sword for gold and silver, as it justifies a more accommodative Federal Reserve stance, but also reduces their appeal as inflation hedges.

• Goldman Sachs said in a note on Thursday that it expects gold prices, in its base case, to rise by around 14% to $4,900 per ounce by December 2026, while also flagging upside risks to this forecast, driven by the potential expansion of diversification demand to include retail investors.

SPDR Gold Trust

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, were unchanged on Thursday, leaving total holdings steady at 1,052.54 metric tons.

The euro fell in European trading on Friday against a basket of global currencies, extending its losses for the fourth consecutive day against the US dollar, following the European Central Bank’s monetary policy meeting, whose outcome largely matched market expectations.

In its final meeting of 2025, the European Central Bank left interest rates unchanged for the fourth consecutive time, while raising its growth forecasts, suggesting that growth will be stronger than previously estimated, driven in particular by domestic demand.

Price overview

• Euro exchange rate today: The euro slipped by around 0.1% against the dollar to 1.715, from the opening level of 1.1723, and recorded a session high at 1.1729.

• On Thursday, the euro ended trading down 0.15% against the dollar, marking its third consecutive daily loss, amid ongoing corrective moves and profit-taking from a three-month high of 1.1804.

US dollar

The dollar index rose by 0.1% on Friday, maintaining gains for the third session in a row, reflecting continued strength in the US currency against a basket of major and secondary currencies.

In addition to buying from lower levels, the dollar is benefiting from easing inflationary pressures on some global central banks, which supports expectations of continued monetary easing and further interest rate cuts.

European Central Bank

In line with expectations, the European Central Bank on Thursday kept its key interest rates unchanged at 2.15%, the lowest level since October 2022, marking the fourth consecutive meeting without a change.

The ECB reiterated its data-dependent, meeting-by-meeting approach without committing to a specific interest rate path, noting that current interest rate levels are appropriate given stable inflation and economic growth.

Christine Lagarde

ECB President Christine Lagarde said on Thursday that the bank remains in a “good position,” stressing that there is consensus within the Governing Council to keep all options open, including the possibility of raising interest rates if necessary.

Lagarde noted that the European economy is showing greater resilience than expected, with growth supported by domestic demand. She avoided directly addressing the possibility of rate hikes in 2026, but emphasized caution amid geopolitical and trade risks.

European interest rates

Money markets are currently pricing the probability of a 25-basis-point rate cut by the European Central Bank in February 2026 at less than 10%.

Views and analysis

Analysts at Barclays, led by Mariano Cena, said in a note to investors that the ECB meeting did not provide any new information that would change their view on the most likely path of monetary policy or the balance of risks surrounding it.

They added that they continue to expect the ECB to keep interest rates unchanged over the next two years, and see risks tilted toward rate cuts rather than hikes over their forecast horizon.