Prices Supported By Improved Risk Sentiment, But Demand Jitters Remain

Oil prices rose strongly on better risk sentiment following the announcement that although there hadn’t been a debt-ceiling deal following talks between President Biden and House Speaker McCarthy, they had been “productive” and both sides said a default was off the table. Prices have retreated since then but are still higher over the session. The USD index is flat.

• WTI is up 0.3% to $72.24/bbl after reaching an intraday high of $72.62 earlier. Brent is 0.2% higher to $76.14 following a high of $76.53. WTI remains comfortably below key short-term resistance at $73.81, the May 10 high. And for Brent resistance is at $77.60.
• Increased expected US gasoline demand, refilling the US SPR, the IEA’s expected crude deficit, and reduced OPEC output with possibly more announced at the June meeting are all supporting prices. On the other hand uncertainty over China’s economy, further Fed hikes, robust Russian supply and the debt-ceiling impasse have been weighing on the market.
• The immediate outlook for oil prices is highly dependent on debt-ceiling talks. See Debt: No Agreement Yet, But Talks Continue for today’s developments.
• The Saudi Arabian energy minister is due to speak at the Qatar Economic Forum today. Also API weekly US fuel inventory data prints. Later the Fed’s Logan gives welcoming remarks and preliminary May PMIs, May Richmond Fed business confidence and April US new home sales are released.