Oil prices rose more than $2 a barrel on Thursdayahead of the OPEC+ meeting on Sunday, while the passage of a bill to suspend the US debt ceiling helped offset the impact of rising inventories in the country.
US West Texas Intermediate (WTI) crude rose $2.01, or 2.95%, to $70.10 a barrel, while Brent crude futures rose $1.68, or 2.31%, au $s74.28 a barrel.
Both references registered his biggest daily gains in almost a monthrecovering from two consecutive sessions of losses, after the House of Representatives approved a bill on Wednesday to suspend the government’s debt ceiling and improve the chances of avoiding a default.
“The success of the debt ceiling negotiations clears that minefield, but the overall demand outlook remains murky: the trucking sector, for example, is performing poorly,” said Stewart Glickman, CFRA Research Analyst.
Market attention has also shifted to the June 4 meeting of the Organization of the Petroleum Exporting Countries and its allies, including Russia, a group collectively called OPEC+.
“This weekend’s OPEC+ meeting may lead to a bit of caution around those (low price) levels, especially in light of the Saudi Energy Minister’s ‘beware’ warning.”he added.
Four OPEC+ sources told Reuters that alliance unlikely to deepen supply cuts at Sunday meetingbut some analysts maintain that it is a possibility, since demand indicators from China and the United States have been disappointing in recent weeks.
US crude oil reserves unexpectedly rose last week as imports soared and strategic reserves fell to their lowest level since September 1983, according to data from the Energy Information Administration.
“Third Bridge experts wouldn’t rule out more aggressive action by OPEC+, but the push and pull in the market right now is seasonal versus cyclical,” said Peter McNally, an analyst at Third Bridge.
“We are watching to see how strong the developed world’s summer demand rebound will be relative to China’s cyclical recovery struggles. This will determine the effectiveness of OPEC+,” he added.
In May the price of oil lost 11%
Oil extended its decline during the last days of May, as China’s lackluster economic recovery outperformed an upbeat report on employment in the United States.
Manufacturing activity in China fell at a faster rate than April, raising fears that a post-Covid rally had fizzled out. Also the strength of the dollar against the rest of the currencies acted as one more element in favor of the decrease in prices.
The analysts believe that the market trend is down due to risk aversion towards variable income and raw materials and within a framework of uncertainty around the next meeting Sunday of the oil-producing nations.
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