Oil prices continue to rise strongly today. The debt ceiling agreement averted the threat of a default by the United States, the world’s largest oil consumer, while the US jobs report signalled a pause in interest rate hikes. Attention now turns to this weekend’s meeting of leaders of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies.
The price of North Sea Brent crude oil at around 16:15 CET showed an increase of 2.9 percent to around 76.40 dollars per barrel. US light crude oil West Texas Intermediate (WTI) was also gaining 2.9 per cent at the same time, selling at around 72.15 dollars a barrel. For the week, however, both contracts headed for their first decline in three weeks.
Markets were reassured that both houses of the US Congress passed legislation to suspend the debt ceiling. This averted the threat of a default, which analysts said would have shaken global financial markets.
Weakening dollar means cheaper oil outside the USA
Signals of a possible suspension of interest rate hikes in the US also provided support for oil prices. This weakened the dollar, making oil cheaper for non-US investors.
A report from the US Department of Labor showed today that the economy created many more jobs than expected in May. The pace of wage growth then slowed, which could allow the US Federal Reserve (Fed) to pause raising base interest rates this month for the first time since it began its interest rate hiking cycle more than a year ago.
Investor attention is now focused on Sunday’s meeting of the OPEC+ group, the representatives of OPEC countries and their allies from other producing countries. In April, the group surprisingly announced production cuts, sending oil prices higher. Since then, however, the price has erased the gains. Group sources told Reuters that a new production cut was unlikely this time.
Source: ČTK
