Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil rises 3% on US debt ceiling progress, traders on alert for OPEC+ meeting

Published 01/06/2023, 01:38
Updated 01/06/2023, 20:10
© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

By Shariq Khan

BENGALURU (Reuters) -Oil prices rose on Thursday by the most in two weeks ahead of an OPEC+ meeting on Sunday, while House of Representatives passage of a bill to suspend the U.S. debt ceiling helped to offset the impact of rising inventories in the country.

U.S. West Texas Intermediate crude (WTI) rose $2.01, or 3%, to settle at $70.10 a barrel, recording its biggest daily gains since May 5.

Brent crude futures settled at $74.28 a barrel, up by $1.68, or 2.3%, to $74.65 a barrel, their biggest daily gains since May 17.

Both benchmarks recovered from two-straight sessions of losses after the House passed a bill late on Wednesday to suspend the U.S. government's debt ceiling and improve chances of averting a default. The legislation now moves to the Senate.

"The successful debt ceiling negotiations clear that minefield, but the overall demand outlook is still murky - the trucking space is doing poorly, for example," CFRA Research analyst Stewart Glickman said.

The market's focus has also shifted to a June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

"The OPEC+ meeting this weekend may be leading to a little caution around those (low price) levels, particularly in light of the 'watch out' warning from the Saudi energy minister," OANDA analyst Craig Erlam said.

Four sources from OPEC+ told Reuters that the alliance is unlikely to deepen supply cuts at the Sunday meeting, but some analysts maintain that it is a possibility as demand indicators from China and the U.S. have been disappointing in recent weeks.

U.S. crude oil stockpiles rose unexpectedly last week, as imports jumped and strategic reserves dropped to their lowest since Sept. 1983, according to data from the Energy Information Administration. [EIA/S]

© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

"Third Bridge experts would not rule out more aggressive actions from OPEC+, but the tug-of-war right now in the market is the seasonal versus the cyclical," Third Bridge analyst Peter McNally said.

"We are watching to see how strong the developed world's summer demand uptick will be relative to the struggles of China's cyclical recovery. This will determine how effective OPEC+ will be," McNally added.

Latest comments

Very responsible, borrowing more money to pay current debts. These are clever people.
Its not real money at the end of the day, is it….? Brazil can continue to swap its full debt portfolio but has been hammered on sovereign rating leading to high cost of borrowing. Would be right to see some real financial consequences imposed for failing to meet pre-agreed terms
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.