Last Update: May 30, 2023, 01:36 AM IST
New York, United States (USA)
Trading was expected to remain weak on Monday due to UK and US public holidays. (Image: Reuters file)
Brent crude futures rose 12 cents, or 0.2%, to $77.07 a barrel, while US West Texas Intermediate crude rose 25 cents, or 0.3%, to $72.92 a barrel.
Oil prices traded choppy on Monday as markets weighed a tentative US debt ceiling deal that would avert a default by the world’s top oil consumer against further Federal Reserve interest rate hikes that could hit energy demand. can reduce.
Brent crude futures rose 12 cents, or 0.2%, to $77.07 a barrel, while US West Texas Intermediate crude rose 25 cents, or 0.3%, to $72.92 a barrel.
Both the benchmarks flip-flopped between positive and negative territory. Trading was sluggish on Monday due to UK and US public holidays.
“Debt deal enthusiasm is waning as worries for another rate hike by the Fed in June are waning,” brokerage Liquidity Energy LLC wrote in a note.
US President Joe Biden and Speaker of the House of Representatives Kevin McCarthy reached an agreement over the weekend to suspend the $31.4 trillion debt ceiling and limit government spending for the next two years. Both leaders expressed confidence that both Democratic and Republican lawmakers would support the deal.
Nevertheless, analysts see any rise in oil prices as short term.
According to the CME’s FedWatch tool, markets are now pricing in a roughly 50-50 chance that the Fed will hike rates by 25 basis points at its June 13-14 meeting, up from an estimated 8.3% a month ago. is more than likely.
At its last policy meeting on May 2-3, the Federal Reserve indicated it was prepared to kick off its most aggressive rate-hike cycle in June since the early 1980s.
“Higher US rates are a drag on crude demand,” said IG Sydney-based analyst Tony Sycamore.
The dollar also declined on Monday as a debt ceiling deal raised risk appetite in world markets and reduced the greenback’s safe-haven appeal. A lower dollar helps demand for oil, which is priced in dollars.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, are due to meet on June 4.
Saudi Energy Minister Abdulaziz bin Salman warned short-sellers that oil prices would fall in a possible sign that OPEC+ could cut production further.
However, comments from Russian oil officials and sources including Deputy Prime Minister Alexander Novak indicate the world’s third-largest oil producer is leaning towards leaving output unchanged.
“Traders have been a little confused as to what we can expect,” said Craig Erlam, senior market analyst at OANDA.
“It could be that Saudi Arabia wants to keep traders on their toes, but making these comments and not following through could be seen as weak and could see prices fall again,” Erlam said. .
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
