SINGAPORE: Oil prices rebounded on Friday from losses of more than 1 percent the previous day as investors turned cautiously optimistic over the fading risk of a US debt default, according to Reuters.
Brent futures rose $1.15, or 1.5 percent, to $77.01 a barrel by 15:05 p.m. Saudi time, while West Texas Intermediate US crude for July expiry climbed $1.16, or 1.6 percent, to $73.10.
The less active US crude contract for May which is due to expire on Monday was up $1.09 to $72.95.
“I think markets have been pricing out the risks of a US debt default, which translates to a more risk-on environment and some dip-buying in Brent crude from previous oversold conditions,” said Yeap Jun Rong, a market strategist at IG.
Earlier this week, US President Joe Biden and Speaker of the House of Representatives Kevin McCarthy reiterated their aim to strike a deal to raise the $31.4 trillion federal debt ceiling, agreeing to talk as soon as Sunday.
“Once we get over the US debt ceiling issue, fundamentals may eventually matter more to determine if any upward move can be sustained,” said Jun Rong.
Sentiment remains mixed as investors juggle optimism over avoidance of a US debt default with inflation data that could portend more interest rate hikes from global central banks.
US inflation does not seem to be cooling fast enough to allow the Federal Reserve to pause its interest-rate hike campaign, according to two Fed policymakers.
The potential for additional rate hikes increases concerns about demand weakness in the US, said analysts from National Australia Bank.
The analysts said, however, there is upside to prices as they expect China’s demand to continue improving throughout 2023, which should offset the slowdown in Organisation for Economic Co-operation and Development demand.
China’s oil refinery throughput in April rose 18.9 percent from a year earlier to the second-highest level on record, data showed earlier this week.
Chinese refiners maintained high runs to meet recovering domestic fuel demand and build stockpiles ahead of the summer travel season.
