# Oil rebounds on fading risk of U.S. debt default Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-19 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil rebounds as risk of U.S. debt default fades Meta Description: Investors cautiously optimistic as potential U.S. debt default risk fades, leading to increases in Brent and U.S. crude prices. Market sentiment mixed with URL: https://financedigest.com/oil-rebounds-on-fading-risk-of-u-s-debt-defaulthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-19t004647z1lynxmpej4i00prtroptp4global-oil-1736813992236-compressed.jpg) By Noah Browning LONDON (Reuters) -Oil prices rebounded on Friday from losses of more than 1% the previous day as investors turned cautiously optimistic over the fading risk of a U.S. [debt default](https://www.financedigest.com/oil-slumps-5-to-five-week-low-amid-us-debt-default-fears.html "Oil slumps 5% to five-week low amid US debt default fears"). Brent futures rose 69 cents, or 0.9%, to $76.55 a barrel by 0923 GMT, while West Texas Intermediate U.S. crude climbed 56 cents, or 0.8%, to $72.42. I think [markets have been pricing out the risks](https://www.financedigest.com/markets-pricing-some-geopolitics-but-risk-premia-can-grow-further-goldman.html "Markets pricing some geopolitics, but risk premia can grow further -Goldman") of a U.S. [debt default](https://www.financedigest.com/explainer-how-wall-street-is-preparing-for-possible-us-debt-default.html "Explainer-How Wall Street is preparing for possible US debt default"), which translates to a more risk-on environment and some dip-buying in Brent crude from previous oversold conditions,” said Yeap Jun Rong, a market strategist at IG. Earlier this week, U.S. President Joe Biden and Speaker of the House of Representatives Kevin McCarthy reiterated their aim to strike a deal to raise the $31.4 trillion federal [debt ceiling](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"), agreeing to talk as soon as Sunday. Traders were reluctant to go into the weekend short, on the off [chance that an agreement to raise](https://www.financedigest.com/med-tech-innovators-pitch-for-the-chance-to-raise-funding-to-save-lives.html "Med tech innovators pitch for the chance to raise funding to save lives") the U.S. government’s debt ceiling is struck over the weekend,” said Vandana Hari, founder of [oil market](https://www.financedigest.com/the-quest-to-shine-digitally-to-keep-the-lavender-oil-market-on-the-toes.html "The Quest To Shine Digitally To Keep The Lavender Oil Market On The Toes") analysis provider Vanda Insights. Sentiment [remains mixed as investors](https://www.financedigest.com/unregulated-investment-schemes-remain-a-threat-to-investors.html "Unregulated Investment Schemes Remain a Threat to Investors") juggle optimism over avoidance of a U.S. debt default with inflation data that could portend more interest rate hikes from [global central banks](https://www.financedigest.com/open-banking-goes-global.html "Open Banking Goes Global"). U.S. inflation does not seem to be cooling [fast enough](https://www.financedigest.com/why-banks-cant-adopt-digital-identities-fast-enough.html "Why Banks Can’t Adopt Digital Identities Fast Enough") to allow the Federal Reserve to pause its interest-rate hike campaign, according to two Fed policymakers. The potential for additional rate hikes increases concerns about demand weakness in the United States, said analysts from [National Australia Bank](https://www.financedigest.com/banks-can-exploit-emotional-capital-underpinning-nations-love-holidays.html "How banks can exploit the emotional capital underpinning the nation’s love of holidays"). The analysts said, however, there is upside to prices as they expect [China’s demand](https://www.financedigest.com/oil-rebounds-from-drop-on-china-demand-concerns.html "Oil rebounds from drop on China demand concerns") to continue improving throughout 2023, which should offset the slowdown in OECD demand. [China’s oil](https://www.financedigest.com/oil-hits-3-week-high-as-china-eases-covid-curbs.html "Oil hits 3-week high as China eases COVID curbs") refinery throughput in April rose 18.9% from a year earlier to the second-highest level on record, data showed earlier this week. Chinese refiners maintained high runs to meet recovering domestic fuel [demand and build stockpiles ahead of the summer travel](https://www.financedigest.com/tui-sees-summer-travel-demand-significantly-lifting-2023-profit.html "TUI sees summer travel demand ‘significantly’ lifting 2023 profit") season. (Additional reporting by Jeslyn Lerh in Singapore; editing by Tom Hogue and Jason Neely) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---