Oil Edges Higher on Debt-Deal Progress, China Factory Activity

By Bloomberg

Jun 01, 2023

image is BloomburgMedia_RVHUBXDWLU6801_01-06-2023_06-21-10_638211744000000000.jpg

Oil storage tanks in the Keihin industrial area in Yokohama, Kanagawa Prefecture, Japan, on Monday, April 10, 2023. Saudi Arabia hiked official selling prices for all of its oil sales to Asian customers in May, days after the kingdom led a surprise OPEC+ output cut. Photographer: Toru Hanai/Bloomberg

(Bloomberg) -- Oil rose as progress on a US debt-deal and expanding factory activity in China overshadowed persistent concerns over the demand outlook.

West Texas Intermediate edged above $68 a barrel after losing around 6% over the previous two sessions. The House passed debt-limit legislation, sending the measure to the Senate for consideration as a default deadline looms. A private survey showed a slight expansion of Chinese manufacturing activity in May, a surprise improvement that contradicted official data.

Traders will now be looking ahead to an OPEC+ meeting over the weekend in Vienna to discuss the group’s production policy. Resilient Russian exports are part of the reason why futures are down around 15% this year, as well as aggressive monetary tightening from the Federal Reserve.

“The broader macro environment is really driving sentiment,” said Daniel Hynes, a senior commodity strategist at ANZ Group Holdings Ltd. “Anything that provides a glimmer of hope that demand may not be as weak as expected is going to be seen as a positive.”

Progress on the debt-deal also offset signs of swelling US crude stockpiles. The American Petroleum Institute reported inventories rose by 5.2 million barrels last week, which would be the biggest increase since February if confirmed by government data later on Wednesday.

By Alex Longley