Oil prices rose on Friday as US officials looked close to reaching a debt ceiling agreement and the market evaluated conflicting messages about supply from Russia and Saudi Arabia ahead of the next OPEC+ meeting.
Brent crude was up 69 cents, or 0.9%, at $76.95 a barrel. West Texas Intermediate (WTI) was up 84 cents, or 1.2%, to close at $72.67 a barrel.
On a weekly basis, benchmarks rose 1.7% in Brent and 1.6% in WTI in the second week.
Still, markets remained cautious as there were concerns that debt ceiling talks could be prolonged and the Federal Reserve rate hike next month, which will curb demand after strong US consumer spending data and inflation readings.
A Biden administration official said while negotiators could reach an agreement on Friday to raise the US government’s $31.4 trillion debt ceiling, talks could stretch into the weekend.
The benchmarks fell more than $2 a barrel on Thursday after Russian Deputy Prime Minister Alexander Novak dismissed the possibility of further production cuts by OPEC+ at its June 4 meeting in Vienna. Markets are discussing OPEC+ plans ahead of next week’s meeting.
According to sources familiar with Russia’s current thinking, Russia tends to leave oil production volumes unchanged because Moscow is satisfied with current prices and production.
This contrasts with previous hints of possible production cuts from OPEC’s de facto leader, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, who warned short sellers to be “careful”. Markets discuss OPEC+ plans ahead of next week’s meeting
Bets on falling oil prices have risen.
Money managers cut their net long-term crude oil futures and options positions in the United States for the week of May 23, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Meanwhile, US gasoline demand is expected to remain strong as AAA drivers’ group forecast the Memorial Day holiday weekend of May 27-29 to be the third busiest weekend for auto travel since 2000.
On the supply side, U.S. oil rigs fell five to 570 this week, according to the report from Baker Hughes. In May, the oil rigs count fell by 21 rigs, which became the biggest monthly drop since June 2020.
However, slowing economic growth and ongoing inflation in Europe limited price increases when the Dutch Central Bank chief said the European Central Bank needed at least two more 25 basis points increase in interest rates.