Oil Rebounds on Fading Risk of U.S. Debt Default

Date: 19 May 2023 - 23:01

News ID: ۱۱۵۱۹۲

NEW YORK (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 61 cents, or 0.8%, to $76.47 a barrel by 1345 GMT, while West Texas Intermediate U.S. crude for July expiry climbed 50 cents, or 0.7%, to $72.44
The less active U.S. crude contract for May, which is due to expire on Monday was up 72 cents to $72.58.
“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.