Oil Set for Best Week Since Mid-April on US Debt-Deal Optimism

May 19, 2023 by Bloomberg
image is BloomburgMedia_RUUVSCT0AFB401_19-05-2023_06-00-08_638200512000000000.jpg

A flame from gas flare blazes on top of a flare stack at the Exxon Mobil Corp. Banyu Urip Central Processing Facility in the Cepu block of Bojonegoro, East Java, Indonesia, on Thursday, Dec. 8, 2016. Exxon is seeking to increase production from the Banyu Urip field to 200,000 barrels per day, according to Erwin Maryoto, Vice President of Public and Government Affairs at ExxonMobil Cepu. Photographer: Dimas Ardian/Bloomberg

Oil headed for its first weekly advance in more than a month on optimism that the US will avert a catastrophic debt default.

West Texas Intermediate futures climbed above $72 a barrel and are 3.2% higher for the week. House Speaker Kevin McCarthy said negotiators may reach an agreement in principle as soon as this weekend. Crude buying by some Asian refiners added to bullish sentiment for the market.


Crude is still down 10% this year as China’s lackluster economic recovery and monetary tightening by the Federal Reserve weigh on the outlook. Fed officials injected some uncertainty into the market, sounding increasingly split on whether to raise interest rates at their meeting next month or pause.

“Oil prices seem to be taking its cue from the broader risk environment,” said Yeap Jun Rong, a market strategist for IG Asia Pte. Optimism around debt ceiling talks, the upcoming US summer driving season, and the nation’s plan to replenish its strategic reserves could lend support to futures, he added.

Wildfires continued to rage in Alberta, Canada’s top energy-producing province, disrupting output and adding some tightness to the market. Rystad Energy estimates that about 240,000 barrels a day has been shut due to the blazes.

©2023 Bloomberg L.P.

By Yongchang Chin

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