Oil advanced after President Joe Biden and House Speaker Kevin McCarthy reached a tentative deal over the weekend on the U.S. debt ceiling, likely averting a catastrophic default.
West Texas Intermediate futures rose above US$73 a barrel after closing 1.2 per cent higher on Friday. Biden and McCarthy voiced confidence that their agreement will pass Congress and reach the president's desk for signature. Liquidity is expected to be thin on Monday with the U.S. and U.K. on national holidays.
Oil is still around nine per cent lower this year as China's lackluster economic recovery and the Federal Reserve's aggressive monetary tightening weighed on the demand outlook. Russian supply has also been resilient, even after the nation said it would cut output, while domestic crude processing has dropped.
Supply dynamics remain in focus, with Saudi Arabia and Russia offering conflicting statements recently on the potential for changes to supply policy from OPEC+. The group meets in Vienna on June 3-4 to decide output levels. Oil's advance “on U.S. debt ceiling hopes allays imminent threats of a supply cut response” from OPEC+, said Vishnu Varathan, the Singapore-based Asia head of economics and strategy for Mizuho Bank Ltd.There will be no settlement Monday due to the US Memorial Day holiday and trades will be booked on Tuesday.
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