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Tokyo — Oil prices rose on Tuesday as the expectations the debt ceiling deal in US, the world’s biggest oil user, will spur more demand but fears of further interest rate rises and that oil cartel Opec+ will leave output quotas unchanged capped gains.
Brent crude futures climbed 35c, or 0.5%, to $77.42 a barrel by 1.45pm after gaining 12c on Monday.
US West Texas Intermediate (WTI) crude rose 53c to $73.20 a barrel, up 0.7% from Friday's close. There was no settlement on Monday because of a US public holiday.
While the debt-ceiling deal has spurred buying in riskier assets such as commodities, major oil producers will meet on June 4 and it is unclear whether they might increase their output cuts amid an overall slump in prices since the middle of April. Additionally, expectations are for US interest rates to rise further, potentially crimping economic growth and therefore oil demand.
“Investors have shifted their attention to the outcome of the Opec+ meeting this weekend as there have been mixed messages from major oil producers,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“A US debt-ceiling deal boosted risk appetite, but investors are reluctant to step up buying amid worries over inflation and potential further increases of interest rates,” he said.
US President Joe Biden and House of Representatives speaker Kevin McCarthy over the weekend forged an agreement to suspend the $31.4-trillion debt ceiling and cap government spending for the next two years.
Both leaders expressed confidence that both Democratic and Republican legislators will support the deal. The US House rules committee said it would meet on Tuesday to discuss the debt-ceiling bill, which needs to pass a divided Congress before June 5.
Investors are also closely watching whether Opec+ will change its output quotas.
Saudi energy minister Abdulaziz bin Salman last week warned short-sellers betting that oil prices would fall to “watch out”, in a possible signal that Opec+ may further cut output.
However, comments from Russian oil officials and sources, including deputy prime minister Alexander Novak, indicate the world’s third-largest oil producer is leaning towards leaving output unchanged.
In April, Saudi Arabia and other members of Opec+ announced further oil output cuts of about 1.2-million barrels a day, bringing the total volume of cuts by Opec+ to 3.66-million barrels, according to Reuters’ calculations.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices gain on US debt deal
Tokyo — Oil prices rose on Tuesday as the expectations the debt ceiling deal in US, the world’s biggest oil user, will spur more demand but fears of further interest rate rises and that oil cartel Opec+ will leave output quotas unchanged capped gains.
Brent crude futures climbed 35c, or 0.5%, to $77.42 a barrel by 1.45pm after gaining 12c on Monday.
US West Texas Intermediate (WTI) crude rose 53c to $73.20 a barrel, up 0.7% from Friday's close. There was no settlement on Monday because of a US public holiday.
While the debt-ceiling deal has spurred buying in riskier assets such as commodities, major oil producers will meet on June 4 and it is unclear whether they might increase their output cuts amid an overall slump in prices since the middle of April. Additionally, expectations are for US interest rates to rise further, potentially crimping economic growth and therefore oil demand.
“Investors have shifted their attention to the outcome of the Opec+ meeting this weekend as there have been mixed messages from major oil producers,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“A US debt-ceiling deal boosted risk appetite, but investors are reluctant to step up buying amid worries over inflation and potential further increases of interest rates,” he said.
US President Joe Biden and House of Representatives speaker Kevin McCarthy over the weekend forged an agreement to suspend the $31.4-trillion debt ceiling and cap government spending for the next two years.
Both leaders expressed confidence that both Democratic and Republican legislators will support the deal. The US House rules committee said it would meet on Tuesday to discuss the debt-ceiling bill, which needs to pass a divided Congress before June 5.
Investors are also closely watching whether Opec+ will change its output quotas.
Saudi energy minister Abdulaziz bin Salman last week warned short-sellers betting that oil prices would fall to “watch out”, in a possible signal that Opec+ may further cut output.
However, comments from Russian oil officials and sources, including deputy prime minister Alexander Novak, indicate the world’s third-largest oil producer is leaning towards leaving output unchanged.
In April, Saudi Arabia and other members of Opec+ announced further oil output cuts of about 1.2-million barrels a day, bringing the total volume of cuts by Opec+ to 3.66-million barrels, according to Reuters’ calculations.
Reuters
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