Oil prices rose on Friday after falling more than 1% as investors became cautiously hopeful about the U.S. debt default risk.
By 0420 GMT, Brent futures jumped 59 cents, or 0.8%, to $76.45, while WTI advanced 48 cents, or 0.7%, to $72.34.
“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 I.G. market strategist Yeap Jun Rong.
President Joe Biden and House Speaker Kevin McCarthy agreed to meet Sunday to discuss raising the $31.4 trillion federal debt ceiling earlier this week.
“Once we get over the U.S. debt ceiling issue, fundamentals may eventually matter more to determine if any upward move can be sustained,” said Yeap.
Investors balance optimism about avoiding a U.S. government default with inflation statistics that could lead global central banks to raise interest rates.
Two Fed members say U.S. inflation is not dropping quickly enough to stop interest-rate hikes.
National Australia Bank analysts worry about U.S. demand slowdown due to future rate hikes.
However, experts predict China’s demand to improve until 2023, offsetting the downturn in OECD demand, which should boost prices.
This week, data indicated that China’s oil refinery throughput in April surged 18.9% to the second-highest level ever.
Chinese refiners kept runs high to fulfill rising domestic fuel demand and stockpile for summer travel.
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