Crude Still Quietly Optimistic Following Debt Deal

Oil continued its relief rally following the weekend’s agreement to lift the US debt ceiling. WTI rose 0.5% and is currently around $73.01/bbl and Brent +0.2% to $77.10 in thin trading given the US and UK were closed for holidays. The USD index was slightly higher.

• The uncertainty is not over yet, as the US debt deal still has to be passed through both houses of Congress. But it looks like a default has been avoided and thus the adverse economic consequences and negative implications for oil demand. Biden and McCarthy are confident that their sides will pass the agreement. Treasury Secretary Yellen says that they have until June 5 to approve it.
• WTI reached a high of $73.55 during APAC trading on Monday but then fell to an intraday low of $72.04 during the European session. It has bounced off that low but is around the $73 mark. Brent reached a high of $77.83 before falling to $76.16. It is now holding above $77.
• Supply continues to come back on line in Alberta, Canada following wildfires. OPEC meets on June 3-4, where there is a risk they’ll reduce quotas further to support prices but it seems more likely that they will wait to assess the full effect of the cuts made in May.