Crude oil prices shoot as US Congress passes US debt ceiling bill

Following the Washington, DC, passage of a bill raising the US debt ceiling, oil prices increased amid optimistic sentiment.

Brent crude futures increased 0.96% to $74.99 a barrel, while US West Texas Intermediate crude (WTI) increased 0.94% to $70.76 after two consecutive days of losses.

Markets were reassured by the US Congress’ approval of a legislature suspending the US government’s $31.4 billion debt ceiling and by earlier signs of a preliminary pause in hiking rates by the US Federal Reserve.

The US debt ceiling bill was approved by the US Senate on Thursday, averting a calamitous sovereign default that would have greatly impacted global financial markets.

Investor attention is now fixated on the June 4, 2023, meeting of OPEC+, or the Organization of the Petroleum Exporting Countries and Allies, including Russia.

Ministers from key oil producing nations will decide how to further cut back on the output to support government output.

Further cutbacks in OPEC+ output following their surprise deduction of 1.216 million barrels per day in April 2023 would be bullish for crude oil prices.

Signals on any such deductions have been varied, with several new agencies reporting and analysts from international banks, including Goldman Sachs and HSBC, indicating that further output cuts were unlikely and the western bloc would adopt a “wait and observe” approach.

Other oil market observers have pointed to weak manufacturing data from the US and China as making OPEC+ deductions more likely.