SINGAPORE- Oil prices rose on Monday after US 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 66 cents, or 0.9 percent, to $77.61 a barrel, while US West Texas Intermediate crude was at $73.42 a barrel, up 75 cents, or 1 percent. Trade is expected to be subdued on Monday because of UK and US holidays.
US President Joe Biden and House Speaker Kevin McCarthy on Saturday finalized an agreement in principle to suspend the $31.4 trillion debt ceiling and cap government spending for the next two years. Both leaders expressed confidence on Sunday 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 US debt renewed investor appetite for riskier assets such as commodities.
“The tentative debt deal offered a relief rally in risk assets, including crude oil,” said Tina Teng, a CMC Markets analyst.
Last week, Brent and WTI rose by more than 1 percent, gaining for a second week.
Prices gained as the US 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. – Reuters
