Oil rises after US leaders strike provisional debt deal
"The tentative debt deal offered a relief rally in risk assets, including crude oil," said Tina Teng, a CMC Markets analyst.
Representative image
SINGAPORE: Oil prices rose on Monday after U.S. 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%, to $77.61 a barrel by 0247 GMT, while U.S. West Texas Intermediate crude was at $73.42 a barrel, up 75 cents, or 1%. Trade is expected to be subdued on Monday because of UK and U.S. holidays.
U.S. President Joe Biden and House Speaker Kevin McCarthy on Saturday finalised 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 U.S. 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.
U.S. President Joe Biden and House Speaker Kevin McCarthy on Saturday finalised 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 U.S. 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.
"Higher U.S. rates are a headwind for crude oil demand," he added.
Investors will be watching for manufacturing and services data in China, the world's biggest oil importer, this week as well as U.S. nonfarm payroll data on Friday for signals on economic growth and oil demand.
The bumpy economic recovery in China, is weighing on oil markets, said Teng.
Future oil output growth in the U.S., the world's biggest producer, also may slow as energy firms cut rigs for a fourth week. The number of oil rigs operating fell by five to 570 last week to their lowest since May 2022, energy services firm Baker Hughes Co (BKR.O) said in its weekly report on Friday.