Oil prices climb as focus shifts to Opec meeting

London — Oil prices rose on Friday after a US debt ceiling deal averted a default in the world’s biggest oil consumer, while attention turned to a meeting of Opec ministers and their allies at the weekend.

Brent crude futures rose 77c, or 1%, to $75.05 a barrel by 8.06am GMT, while US West Texas Intermediate crude (WTI) was up 69c, or 1%, at $70.79. Both contracts were headed for their first weekly loss in three weeks.

Markets were reassured by a bipartisan deal to suspend the limit on the US government’s $31.4bn debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the US dollar, making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of Opec and allies including Russia, collectively called Opec+.

Opec+ in April announced a surprise cut of 1.16-million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the US Institute for Supply Management (ISM) said its manufacturing PMI (Purchasing Managers’ index) fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

Reuters