Oil Rises on Debt Ceiling Optimism, Offsetting Recession Concerns

Early Friday Asian trade showed a rise in oil prices, and prices looked set to end the week on a stronger note, as hopes of a deal to raise the U.S. debt ceiling outweighed concerns about a glut of supplies and an economic downturn. 

By 10:57 a.m. Bangkok time, Brent oil futures rose to $76.40 per barrel and West Texas Intermediate crude futures climbed to $72.44 per barrel. This week was anticipated to bring the largest weekly rise for both contracts since early April, likely in the range of 2% to 3%.

After U.S. lawmakers showed signs of making headway this week toward raising the U.S. debt limit and averting a default, both futures held onto their gains.

On Thursday, House Speaker Kevin McCarthy expressed optimism that Congress will be able to strike a debt ceiling agreement in time for a vote next week.

McCarthy told reporters in the Capitol, “I see the path that we can come to an agreement.” “And I think we have a structure now and everybody’s working hard, and I mean, we’re working two or three times a day, then going back getting more numbers,” he added.

Signs of higher U.S. fuel consumption ahead of the summer season provided support for the crude markets. The Biden administration has signaled that it will begin restocking the Strategic Petroleum Reserve.

However, oil markets remained bearish as negative economic data from China trickled in. China’s ability to spur a recovery in oil demand this year has been called into question by softer-than-expected figures on industrial production and retail sales revealed this week.