Americas News
Debt Ceiling Resolution Boosts Oil, But OPEC Uncertainty Remains
The formalization of the debt ceiling deal by the U.S. congress caused oil prices to jump on Friday by over 2 percent, fortified by a curious element of American employment increasing more than expected.
Brent settled up 2.4 percent to $76.13 per barrel, while West Texas Intermediate rose 2.3 percent to $71.74.
Washington's bipartisan deal suspends the limit on the government's $31.4 billion debt ceiling, thus averting a possible default that could have caused financial market chaos.
As for the employment numbers, they rose more than expected in May, but a moderation in wages caused analysts to speculate that this might persuade the Federal Reserve to skip an interest rate hike in June.
What lies ahead for traders is the upcoming Sunday meeting of the Organization of the Petroleum Exporting Countries (OPEC), and Craig Erlam, senior market analyst at Oanda, summarized analytical sentiment by stating, "While there seems to be a widely held view that [OPEC+] won't announce any further cuts, it's worth noting that the same was true at the last meeting and then the group announced cuts of roughly another million barrels.
"It's hard to ignore the warnings from the Saudi energy minister to 'watch out', threatening more 'ouching' for short speculators."
For its part, HSBC stated in a note that it did not expect OPEC to change policy, but it could cut output later if an expected market deficit in the second half of the year does not happen and prices remain below $80 per barrel.
Despite Friday's crude price gains, WTI remained on course for a weekly drop; and the commodity is down more than 10 percent this year, due partly to resilient exports from Russia despite the European Union sanctions.
