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RIYADH: Oil prices rose on Monday after US leaders reached a tentative debt-ceiling deal, possibly averting a default in the world’s largest economy and oil consumer, although concerns about further interest rate hikes capped gains.
Brent crude futures climbed 45 cents, or 0.6 percent, to $77.40 a barrel by 3:30 a.m. Saudi time, while US West Texas Intermediate crude was at $73.2 a barrel, up 53 cents, or 0.7 percent.
US President Joe Biden and House Speaker Kevin McCarthy on the weekend forged an agreement to suspend the $31.4 trillion debt ceiling and cap government spending for the next two years. Both leaders expressed confidence that members of the Democratic and Republican parties would vote to support the deal.
Reaching the deal and coming closer to avoiding a default on US debt renewed investor appetite for riskier assets such as commodities.
Analysts said the provisional deal had taken the pressure off the markets, offering a relief rally in risk assets, including crude oil.
“We could see more gains as a relief rally gets underway in the broader financial markets when the US comes back from the long Memorial Day weekend,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Last week, Brent and WTI rose by more than 1 percent, gaining for a second week.
Asia’s crude imports jump in May
Asia’s crude oil imports are on track for a strong rebound in May as the region’s two biggest buyers, China and India, suck up Russian cargo ships.
A total of 27.73 million barrels per day of crude is expected to be offloaded at ports in the top-consuming region in May, according to data compiled by Refinitiv Oil Research.
This is up 8.6 percent from the 26.39 million bpd in April and will be the strongest outcome in 2023.
The strength was concentrated in China, the world’s biggest crude importer, expected to land 11.96 million bpd in May, up from April’s relatively soft 10.96 million and just below the 34-month high of 12.37 million bpd in March.
Russian crude has also become the major player in India, with imports rising to 1.97 million bpd in May, up from 1.68 million bpd in April.
This gives Russia a 38.6 percent market share of India’s total of 5.10 million bpd in May, the second-highest monthly import volume on record after April 2022.
(With input from Reuters)