By Anna Hirtenstein LONDON (Reuters) -Oil prices fell more than 1% on Friday, extending declines for a third session as the United States pushed for a Russia-Ukraine peace deal that could swell global supply while uncertainty over interest rates curbed investors' risk appetite. Brent crude futures dropped by 83 cents, or 1.3%, to $62.55 a barrel by 0845 GMT. U.S. West Texas Intermediate crude was down 1.6%, or 92 cents, at $58.08. Both contracts are set to register declines of about 3% for the week, erasing 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 Russian oil producers Rosneft and Lukoil are set to take effect on Friday. Ukrainian President Volodymyr Zelenskiy said he would work with Washington on a plan to end the war. "With the news of talks coming just as U.S. sanctions on Russia’s two largest oil companies are due to take effect today, oil markets saw some relief on risks to Russian oil supply," said Jim Reid, a managing director at Deutsche Bank.  However, a peace deal could be some way off. "An accord is far from certain," ANZ analysts said in a note to clients, adding that Kyiv has repeatedly dismissed Russia's demands as unacceptable. "The market is also becoming sceptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective," the analysts said. Lukoil has until December 13 to sell its huge international portfolio. A stronger dollar was also depressing oil prices, with the currency poised for its best week in more than a month on investor expectations that the U.S. Federal Reserve is unlikely to cut interest rates next month. [FRX/] OANDA analyst Kelvin Wong said the CME FedWatch tool shows the odds of a December rate cut have been significantly reduced to 35%, down from about 90% a month ago. (Reporting by Anna Hirtenstein in LondonAdditional reporting by Helen Clark and Trixie YapEditing by David Goodman)
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