# Oil gains after US leaders strike debt deal Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-29 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil prices rise on debt deal, but future gains uncertain Meta Description: Oil prices climbed on Monday after US leaders struck a debt deal, easing concerns of a possible default and boosting investor confidence in riskier assets, URL: https://financedigest.com/oil-gains-after-us-leaders-strike-debt-dealhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-28t234329z1lynxmpej4r0eqrtroptp4global-oil-1736813961349-compressed.jpg) # Oil gains after US leaders strike debt deal By Florence Tan and Mohi Narayan (Reuters) -Oil prices rose on Monday after U.S. leaders reached a tentative [debt ceiling deal](https://www.financedigest.com/european-shares-rise-on-us-debt-deal-optimism.html "European shares rise on US debt deal optimism"), 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%, to $77.40 a barrel by 0636 GMT, while U.S. West Texas Intermediate crude was at $73.2 a barrel, up 53 cents, or 0.7%. [Trade is expected](https://www.financedigest.com/ab-foods-says-primark-trading-ahead-of-expectations.html "AB Foods says Primark trading ahead of expectations") to be subdued on Monday because of UK and U.S. holidays. U.S. President Joe Biden and House Speaker Kevin McCarthy on the weekend forged an agreement to suspend the $31.4 trillion [debt ceiling](https://www.financedigest.com/dollar-eases-before-inflation-data-with-nagging-worries-over-debt-ceiling-impasse.html "Dollar eases before inflation data, with nagging worries over debt ceiling impasse") and cap government spending for the next two years. Both [leaders expressed confidence that members of the Democratic and Republican](https://www.financedigest.com/republican-leaders-of-australia-and-nz-to-pledge-allegiance-to-king.html "Republican leaders of Australia and NZ to pledge allegiance to king") parties will vote to support the deal. [Reaching the deal](https://www.financedigest.com/analysis-g7-fails-to-reach-intervention-deal-to-ease-pain-of-soaring-dollar.html "Analysis-G7 fails to reach intervention deal to ease pain of soaring dollar") and coming closer to avoiding a default on U.S. debt renewed investor appetite for riskier assets such as commodities. Analysts said the provisional deal has taken pressure off the markets, offering a relief rally in risk assets, including [crude oil](https://www.financedigest.com/factbox-who-is-buying-russian-crude-oil-and-who-has-stopped.html "Factbox-Who is buying Russian crude oil and who has stopped"). We could see more gains as a relief rally gets under way in the broader [financial markets](https://www.financedigest.com/market-gravity-predicts-banking-and-finance-industry-trends-for-2017.html "Market Gravity predicts banking and finance industry trends for 2017") when the U.S. comes back from the long Memorial Day weekend,” Vandana Hari, founder of [oil market](https://www.financedigest.com/the-sesame-oil-market-to-grow-on-an-innovatively-cordial-note.html "The Sesame Oil Market To Grow On An Innovatively Cordial Note") analysis provider Vanda Insights, said. Last week, Brent and WTI rose by more than 1%, gaining for a [second week](https://www.financedigest.com/global-equity-funds-attract-inflows-for-second-week-in-a-row.html "Global equity funds attract inflows for second week in a row"). [Prices gained](https://www.financedigest.com/oil-prices-extend-gains-with-falling-supplies-in-focus.html "Oil prices extend gains with falling supplies in focus") as the U.S. [debt ceiling talks showed progress](https://www.financedigest.com/wall-street-gains-treasury-yields-rise-as-debt-ceiling-talks-progress.html "Wall Street gains, Treasury yields rise as debt ceiling talks progress") and after Saudi energy minister Abdulaziz bin Salman warned short-sellers betting that oil prices will fall to “watch out” for pain. Bin Salman’s warning was seen as a signal that the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, may further [cut output when they meet](https://www.financedigest.com/amazon-will-not-cut-jobs-in-italy-unions-say-after-meeting.html "Amazon will not cut jobs in Italy, unions say after meeting") on June 4. However, comments from [Russian oil](https://www.financedigest.com/explainer-the-g7s-price-cap-on-russian-oil-begins-to-take-shape.html "Explainer-The G7’s price cap on Russian oil begins to take shape") officials and sources, including Deputy Prime Minister Alexander Novak, indicate the world’s third-largest oil producer is leaning toward leaving output unchanged. Analysts see the [boost in oil prices](https://www.financedigest.com/oil-prices-slide-amid-fears-of-supply-boost-weaker-demand.html "Oil prices slide amid fears of supply boost, weaker demand") from the debt deal as short-lived. The rally’s sustainability is questionable as there is a higher chance the U.S. Federal Reserve will raise interest [rates in June after their preferred inflation metric rose more than expected](https://www.financedigest.com/global-medical-costs-expected-to-increase-in-2017-despite-lower-rates-of-inflation.html "Global Medical Costs Expected to Increase in 2017 Despite Lower Rates of Inflation") for April, IG’s Sydney-based analyst Tony Sycamore said. “Higher U.S. rates are a [headwind for crude oil demand,”](https://www.financedigest.com/switch-from-gas-boosts-oil-demand-but-economic-headwinds-loom-iea.html "Switch from gas boosts oil demand, but economic headwinds loom – IEA") he added. Investors will be watching for manufacturing and services data in China, the world’s biggest [oil importer](https://www.financedigest.com/indias-reliance-makes-rare-buy-of-russian-naphtha-ups-fuel-oil-imports.html "India’s Reliance makes rare buy of Russian naphtha, ups fuel oil imports"), this week as well as U.S. nonfarm payroll data on Friday for signals on [economic growth and oil](https://www.financedigest.com/oil-prices-hold-firm-amid-hopes-for-economic-growth.html "Oil prices hold firm amid hopes for economic growth") demand. [Future oil output growth](https://www.financedigest.com/recent-technological-advancements-to-propel-growth-of-the-sesame-oil-market-in-foreseeable-future.html "Recent Technological Advancements to Propel Growth of the Sesame Oil Market in Foreseeable Future") in the U.S., the world’s biggest producer, also may slow as [energy firms](https://www.financedigest.com/eu-will-propose-windfall-levies-on-energy-firms-von-der-leyen-says.html "EU will propose windfall levies on energy firms, von der Leyen says") cut rigs for a fourth week. The number of oil rigs operating fell by five to 570 last week to their lowest since May 2022, energy [services firm](https://www.financedigest.com/silicon-valley-analytics-firm-fico-achieves-aws-financial-services-competency-status.html "Silicon Valley Analytics Firm FICO Achieves AWS Financial Services Competency Status") Baker Hughes Co said in its weekly report on Friday. (Reporting by Florence Tan in Singapore and Mohi Narayan in New Delhi; Editing Christian Schmollinger and Jacqueline Wong) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---