By Arathy Somasekhar
HOUSTON (RockedBuzz via Reuters) – Oil prices rose on Friday as US officials appeared close to finalizing a debt ceiling deal and as the market weighed mixed messages about supply from Russia and Saudi Arabia ahead of the next US policy meeting. ‘OPEC+.
Brent crude rose 69 cents, or 0.9%, to $76.95 a barrel. US West Texas Intermediate finished up 84 cents, or 1.2%, at $72.67 a barrel.
On a weekly basis, both benchmarks posted a second week of gains with Brent edging up 1.7% while WTI was up 1.6%.
However, markets remained cautious as debt talks could drag on and there are renewed concerns about a Federal Reserve interest rate hike next month that could curb demand after strong US consumer spending data and inflation readings.
While it’s possible negotiators will reach a deal on Friday to raise the US government’s $31.4 trillion debt ceiling, the talks could easily extend into the weekend, a Biden administration official said.
Benchmarks fell more than $2 a barrel on Thursday after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at his June 4 meeting in Vienna.
Russia was inclined to leave oil production volumes unchanged because Moscow is happy with current prices and production, three sources familiar with current Russian thinking told RockedBuzz via Reuters.
This contrasted with earlier hints of possible output cuts by Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), who warned sellers at the discovered to “be careful”.
Bets on falling oil prices have increased.
“I think we are all on our guard here ahead of next week’s OPEC meeting,” said John Kilduff, partner at Again Capital.
Fund managers trimmed their net long positions in U.S. crude futures and options in the week to May 23, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Meanwhile, U.S. gasoline demand is expected to remain strong with automaker group AAA predicting the May 27-29 Memorial Day holiday weekend will be the third busiest for auto travel since 2000.
On the supply side, U.S. oil rigs dropped by five to 570 this week, according to a report by energy services firm Baker Hughes Co. In May, the oil count fell by 21 rigs, which was the largest monthly decline since June 2020.
However, slowing economic growth and sticky inflation in Europe have limited price hikes, with Dutch central bank chief Klaas Knot saying the European Central Bank needs at least two more interest rate hikes by 25 basis points.
(Reporting by Arathy Somasekhar in HoustonAdditional reporting by Shadia Nasralla and Trixie YapEditing by Mark Potter and Matthew Lewis)