NEW YORK: Oil prices traded either side of unchanged on Monday as the market waited for news on the US debt ceiling talks and as a stronger dollar offset support from lower supplies from Canada and OPEC+ producers.
Brent futures for July delivery rose 31 cents, or 0.4%, to $75.89 a barrel by 11:58 a.m. EDT (1558 GMT).
West Texas Intermediate (WTI) crude for June delivery rose 31 cents, or 0.4%, to $71.86, while the July contract, which will become the front-month after Monday’s close, rose 32 cents to $72.00.
US President Joe Biden and top congressional Republican Speaker Kevin McCarthy will meet on Monday to discuss raising the federal government’s debt ceiling , just 10 days before the US could face an unprecedented default .
“I expect plenty of volatility in the coming days and a bounce upward in crude prices as and when a deal is reached to raise the debt ceiling,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
The US dollar, meanwhile, rose against a basket of other currencies, holding just below a two-month high, as investors waited on fresh signals on whether the US Federal Reserve is likely to continue hiking interest rates and watched for news on the US debt ceiling.
A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.
US Minneapolis Fed President Neel Kashkari said it was a “close call” whether he would vote to raise interest rates or pause the central bank’s tightening cycle when it meets next month.
Higher interest rates boost borrowing costs, which can slow the economy and reduce oil demand.
Still, the International Energy Agency (IEA) warned of a looming shortage in the second half of the year when oil demand is expected to eclipse supply by almost 2 million barrels per day (bpd), the Paris-based agency said in its latest monthly report.
Asia will lead oil demand growth of around 2 million bpd in the second half of the year, a senior executive at Vitol said, an increase that could potentially lead to a shortage of supply and drive up prices.
Last week, both oil benchmarks gained about 2%, their first weekly rise in five, after wildfires shut in large amounts of crude supply in Alberta, Canada.
The impact of voluntary production cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, is also being felt after going into effect this month.
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