Oil prices hovered at two-week highs yesterday, as investors expected a likely U.S. Federal Reserve interest rate cut this week to lift economic growth and energy demand, while monitoring geopolitical risk that threatens Russian and Venezuelan supply.

Brent crude futures rose 9 cents, or 0.14 per cent, to $63.84 a barrel, while US West Texas Intermediate crude was at $60.16, up 8 cents, or 0.13 per cent .

Both contracts closed Friday's trading session at their highest levels since November 18. Markets are pricing in an 84 per cent chance of a quarter-point cut at the Fed meeting on Tuesday (today) and Wednesday (tomorrow) data showed.

However, board member comments indicate the meeting is likely to be one of the most divisive in years, intensifying investor focus on the bank's policy direction and internal dynamics, a Reuters report said.

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In Europe, progress in Ukraine peace talks remains slow, with disputes over security guarantees for Kyiv and the status of Russian-occupied territory still unresolved. US and Russian officials also have differing views on the peace proposal tabled by the administration of the US President, Donald Trump,

"The various potential outcomes from Trump's latest push to end the war could release a swing in oil supply of more than 2 million barrels per day," ANZ analysts said in a client note.

Commonwealth Bank of Australia analyst Vivek Dhar said a ceasefire is the main downside risk to the outlook for oil prices while sustained damage to Russia's oil infrastructure is a significant upside risk."