After dipping on news of another U.S. inventory build, crude oil prices rebounded after Senate voted to pass a debt ceiling bill that ended fears of a U.S. debt default.
Following the news about the bill, crude oil prices added 3% by the end of trade on Thursday and were still climbing at the time of writing, with Brent crude moving closer to $75 per barrel and West Texas Intermediate at $70.76 per barrel.
Default fears were the major factor pressuring oil prices over the past couple of weeks as Democrats and Republicans appeared unable to come to an agreement on a compromise deal.
President Biden and House Speaker Kevin McCarthy then stepped in and negotiated such a deal that also attracted criticism from the hardliners in both parties but it also managed to win broad bipartisan support and a default was, once again, averted in the nick of time.
A further boost for oil this week came from expectations that OPEC+ may announce additional cuts at its next meeting, to take place this Sunday in Vienna. For now, the outcome of the meeting is more uncertain than the last few ones, excluding the surprise production cut announcement at the April gathering.
Signals coming from OPEC appear to be conflicting. On the one hand, Saudi Arabia’s energy minister hinted at a further cut, per media reports citing a warning to short sellers that they will be “ouching” again. On the other, Russia has said it’s fine with current production levels.
Yet the Wall Street Journal reported this week Saudi Arabia is not happy with Russia’s stance and the fact it does not seem to have fulfilled its own promise to cut production by half a million barrels daily. This may suggest internal discord is brewing in the cartel, which further enhances the uncertainty surrounding its next meeting.
Most analysts and several OPEC sources, however, appear to be of the opinion that the Sunday meeting would bring no changes to production levels. This means oil prices would be left to factors such as demand and interest rate hikes in the West.
By Irina Slav for Oilprice.com