Oil climbs after US leaders reach tentative debt deal

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose at the start of Asian trade on Monday after U.S. leaders reached an interim debt ceiling deal, possibly averting a default in the world’s biggest oil-consuming economy. world.

Brent crude futures climbed 39 cents, or 0.5%, to $77.34 a barrel at 2317 GMT, while U.S. West Texas Intermediate crude was up $73.12 a barrel. of 45 cents, or 0.6%.

US President Joe Biden and House Speaker Kevin McCarthy reached an agreement in principle on Saturday to suspend the $31.4 trillion debt ceiling. Both leaders said they were confident on Sunday that members of the Democratic and Republican parties will vote to back the deal.

However, the relief for global financial markets could be short-lived as once the deal is approved, the US Treasury is expected to issue bonds that will further tighten liquidity and make funding more expensive for companies already reeling from rising interest rates. high interest.

Last week, Brent and WTI posted a second consecutive weekly gain of more than 1% on the progress of negotiations on the US debt ceiling and after the Saudi energy minister warned short sellers betting that oil prices will fall to “pay attention” to the pain.

Some investors took the warning as a signal that OPEC+, the Organization of the Petroleum Exporting Countries and its allies, including Russia, could consider further production cuts at a June 4 meeting.

However, Russian Deputy Prime Minister Alexander Novak said last week that he did not expect any further action from OPEC+, as a decision on voluntary production cuts was made just a year ago. month.

U.S. energy companies cut rigs for a fourth straight week, with oil rigs down five to 570 last week to their lowest level since May 2022, energy services company Baker Hughes said on Friday. Co in its weekly report.

Investors are watching manufacturing and services data in China this week as well as nonfarm payrolls data in the United States on Friday for signals on economic growth and oil demand.

(Reporting by Florence Tan; Editing by Sonali Paul)

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