Crude Rallies Further But Continues To Face Significant Uncertainty

Oil prices have risen further during APAC trading following Friday’s rally, supported by better risk sentiment following the US debt agreement. The next stage is passing it through Congress which both Biden and McCarthy were confident would occur. WTI is up 0.8% to $73.26/bbl and Brent +0.7% to $77.55. The USD index is flat.

• Brent closed just below $77/bbl on Friday but has spent Monday above that key level with even the intraday low at $77.31. WTI has held above $73 with the low at $73.06.
• Once the US debt-ceiling deal passes Congress, there will be one less concern for the oil market but others remain. It is still worried about further Fed tightening and the resultant recession risk, and the lacklustre recovery in China. On the supply side, Russia doesn’t seem to have reduced its output, but there is the chance that OPEC will reduce quotas again at its upcoming June 3-4 meeting.
• There is a holiday in the US and UK today, so upcoming events are thin. The ECB is observing the Whit Monday holiday. Liquidity in the oil market is expected to be light.