Oil rebounds on fading risk of U.S. debt default
Published On :
By Noah Browning
LONDON (Reuters) -Oil prices rebounded on Friday from losses of more than 1% the previous day as investors turned cautiously optimistic over the fading risk of a U.S. debt default.
Brent futures rose 69 cents, or 0.9%, to $76.55 a barrel by 0923 GMT, while West Texas Intermediate U.S. crude climbed 56 cents, or 0.8%, to $72.42.
I think markets have been pricing out the risks of a U.S. debt default, which translates to a more risk-on environment and some dip-buying in Brent crude from previous oversold conditions,” said Yeap Jun Rong, a market strategist at IG.
Earlier this week, U.S. President Joe Biden and Speaker of the House of Representatives Kevin McCarthy reiterated their aim to strike a deal to raise the $31.4 trillion federal debt ceiling, agreeing to talk as soon as Sunday.
Traders were reluctant to go into the weekend short, on the off chance that an agreement to raise the U.S. government’s debt ceiling is struck over the weekend,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Sentiment remains mixed as investors juggle optimism over avoidance of a U.S. debt default with inflation data that could portend more interest rate hikes from global central banks.
U.S. inflation does not seem to be cooling fast enough to allow the Federal Reserve to pause its interest-rate hike campaign, according to two Fed policymakers.
The potential for additional rate hikes increases concerns about demand weakness in the United States, said analysts from National Australia Bank.
The analysts said, however, there is upside to prices as they expect China’s demand to continue improving throughout 2023, which should offset the slowdown in OECD demand.
China’s oil refinery throughput in April rose 18.9% from a year earlier to the second-highest level on record, data showed earlier this week.
Chinese refiners maintained high runs to meet recovering domestic fuel demand and build stockpiles ahead of the summer travel season.
(Additional reporting by Jeslyn Lerh in Singapore; editing by Tom Hogue and Jason Neely)
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.
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