Oil prices soared on Friday after the US debt-ceiling bill was passed in Washington on Friday and the markets are assessing the possibility of OPEC+ output cuts to support prices over the weekend.
Brent crude futures rose 71 cents, or 0.96%, at 0600 GMT to $74.99 a barrel, while West Texas Intermediate crude (WTI) rose 66 cents, or 0.94%, to $70.76, following two consecutive days of losses.
Markets were comforted by Congress’ passing bill suspending the US government’s $31.4 billion debt ceiling and earlier signals that the Federal Reserve would pause on rate hikes.
The bill was approved by the Senate Thursday night, US time, and averted a grave government default that would shake global financial markets.
Market sentiment was also bolstered by US crude inventories data released by the Energy Information Administration (EIA) on Thursday, which showed crude imports soared last week.
Investor attention is now focused on the Organization of the Petroleum Exporting Countries and the June 4 meeting of allies, including Russia. Major oil-producing countries will decide whether to cut production further to supplement their incomes.
Further cuts in OPEC+ production could be positive for crude oil prices, following the surprise 1.16 million barrels per day cuts in April.
Some analysts say that further production cuts are unlikely and the bloc will take a “wait and see” approach, as signals about the cut are changing. Other market watchers believe weak production data from China and the US make OPEC+ cuts more likely.
Oil prices stabilize as disappointing global production data support OPEC+’s production cuts.
In the US, the world’s largest oil consumer, the Institute for Supply Management (ISM) said on Thursday its manufacturing PMI fell to 46.9 last month, from 47.1 in April.
Manufacturing data from China painted a mixed picture, as Thursday’s Global China manufacturing PMI data contradicted the previous day’s official government data, which reported that factory activity in May fell to a five-month low.
However, traders think that Russia may not take a firm stance on the production cuts, especially since it is struggling to fulfill its offers.