ALBAWABA – Oil prices rose by over 2 percent on Friday on the United States (US) Congress passing the US debt ceiling deal, which averted a historic US default, and the May jobs data report, signalling possible pause in Federal Reserve (Fed) interest rate hikes, Reuters reported.
Brent futures rose $1.85, or 2.5 percent, to $76.13 a barrel, while West Texas Intermediate (WTI) crude rose $1.64, or 2.3 percent, settling at $71.74.
These are the highest settlement prices Brent has achieved since May 26, according to Reuters.
The Senate approved a bipartisan deal to suspend the US debt ceiling, or borrowing limit, following approval in the House of Representatives.
Meanwhile, the US jobs report on May came out Friday, citing the highest jobs growth rate in years.
Economic growth in the world’s largest economy, the US, bodes well for oil demand, which drives prices.
Traders look to OPEC+ oil policy meeting
Meanwhile, oil traders hold their breath for the results of the OPEC+ oil policy meeting, which launched Saturday.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+) are reportedly discussing production cuts, which would further boost oil prices.
"No one wants to be short crude going into a weekend OPEC+ meeting. ... Traders should never underestimate what the Saudis will do and leverage during OPEC+ meetings," Edward Moya told Reuters, a senior market analyst at data and analytics firm OANDA.
Saudi Arabia is the biggest OPEC+ oil producer.
Production cuts in the US
Production cuts are also happening in the US, where the number of operational oil rigs was slashed by the most since September 2021, according to Reuters.
Drillers in the US have been cutting back for months due to an 11 percent drop in US crude prices and a 51 percent drop in natural gas futures since the start of the year.
Mixed oil demand projections
On the demand side, manufacturing data out of China, the world's second-biggest oil consumer, sent mixed signals out to the oil market.
In the meantime, early heatwaves in China are expected to persist through June, putting power grids under strain in mega-cities, Reuters speculated, which should increase demand for oil as well.
