BusinessOil & Gas/Mining

Oil gains after US leaders strike debt deal

Brent crude futures climbed 45 cents, or 0.6%, to US$77.40 a barrel by 0636 GMT, while U.S. West Texas Intermediate crude was at US$73.2 a barrel, up 53 cents, or 0.7%

Oil prices rose on Monday after U.S. leaders reached a tentative debt ceiling deal, possibly averting a default in the world’s largest economy and oil consumer, although concerns about further interest rate hikes capped gains.

Brent crude futures climbed 45 cents, or 0.6%, to US$77.40 a barrel by 0636 GMT, while U.S. West Texas Intermediate crude was at US$73.2 a barrel, up 53 cents, or 0.7%. Trade is expected to be subdued on Monday because of UK and U.S. holidays.

U.S. President Joe Biden and House Speaker Kevin McCarthy on the weekend forged an agreement to suspend the US$31.4 trillion debt ceiling and cap government spending for the next two years. Both leaders expressed confidence that members of the Democratic and Republican parties will vote to support the deal.

Reaching the deal and coming closer to avoiding a default on U.S. debt renewed investor appetite for riskier assets such as commodities.

Analysts said the provisional deal has taken pressure off the markets, offering a relief rally in risk assets, including crude oil.

“We could see more gains as a relief rally gets under way in the broader financial markets when the U.S. comes back from the long Memorial Day weekend,” Vandana Hari, founder of oil market analysis provider Vanda Insights, said.

Last week, Brent and WTI rose by more than 1%, gaining for a second week.

Prices gained as the U.S. debt ceiling talks showed progress and after Saudi energy minister Abdulaziz bin Salman warned short-sellers betting that oil prices will fall to “watch out” for pain.

Bin Salman’s warning was seen as a signal that the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, may further cut output when they meet on June 4.

However, comments from Russian oil officials and sources, including Deputy Prime Minister Alexander Novak, indicate the world’s third-largest oil producer is leaning toward leaving output unchanged.

Analysts see the boost in oil prices from the debt deal as short-lived.

The rally’s sustainability is questionable as there is a higher chance the U.S. Federal Reserve will raise interest rates in June after their preferred inflation metric rose more than expected for April, IG’s Sydney-based analyst Tony Sycamore said.

“Higher U.S. rates are a headwind for crude oil demand,” he added.

Investors will be watching for manufacturing and services data in China, the world’s biggest oil importer, this week as well as U.S. nonfarm payroll data on Friday for signals on economic growth and oil demand.

Future oil output growth in the U.S., the world’s biggest producer, also may slow as energy firms cut rigs for a fourth week. The number of oil rigs operating fell by five to 570 last week to their lowest since May 2022, energy services firm Baker Hughes Co said in its weekly report on Friday.

Asaase Radio 99.5 broadcasts on radio via 99.5 in Accra, 98.5 in Kumasi, 99.7 in Tamale, 100.3 in Cape Coast and on our affiliates Bawku FM 101.5 in Bawku, Beats FM 99.9 in Bimbilla, Somua FM 89.9 in Gushegu, Stone City 90.7 in Ho, Mining City 89.5 in Tarkwa and Wale FM 106.9 in Walewale
Tune in or log on to broadcasts 
online:, Sound Garden and TuneIn
Follow us on Twitter: @asaaseradio995
Live streaming: Also on YouTube: Asaase Radio Official.
Join the conversation. Call: 020 000 9951 or 059 415 7777. Or WhatsApp: 020 000 0995.


Show More

Related Articles

Back to top button

Adblock Detected