NEW YORK: Oil prices rose about 2% on Friday after the US Congress passed a debt ceiling deal that averted a government default in the world’s biggest oil consumer and jobs data fed hopes for a possible pause in interest rate hikes ahead of a meeting of OPEC and its allies this weekend.
Brent futures rose $1.80, or 2.4%, to $76.08 a barrel by 1:39 p.m. EDT (1739 GMT). US West Texas Intermediate (WTI) crude rose $1.58, or 2.3%, to $71.68.
WTI was headed for its highest close since May 26 and Brent for its highest close since May 29. For the week, both contracts were down about 1%, which would be their first weekly decline in three weeks.
Open interest in futures contracts rose on Thursday to the highest since July 2021 for Brent and March 2022 for WTI.
The US Senate approved a bipartisan deal to suspend the limit on the US government debt ceiling, staving off a default that would have rocked financial markets.
US employment increased more than expected in May, but a moderation in wages could allow the US Federal Reserve to skip an interest rate hike this month for the first time in more than a year, which could support oil demand.
Oil traders have will watch the June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The group in April announced a surprise cut of 1.16 million barrels per day, but price gains from that move have been erased with crude trading below pre-cut levels.
Sources told Reuters OPEC+ was unlikely to announce fresh output cuts.
“No one wants to be short crude going into a weekend OPEC+ meeting ... traders should never underestimate what the Saudis will do and leverage during OPEC+ meetings,” said Edward Moya, senior market analyst at data and analytics firm OANDA.
Saudi Arabia is the biggest producer in OPEC.
In the US, energy firms this week slashed the number of oil rigs operating by the most since September 2021, reducing the overall count for a fifth week in a row, energy services firm Baker Hughes Co said in a closely followed report.
US drillers have been cutting back on drilling for months due to an 11% drop in US crude prices and a 51% drop in natural gas futures since the start of the year.
On the demand side, manufacturing data out of China, the world’s second biggest oil consumer, painted a mixed picture.
China is suffering from early heatwaves, expected to persist through June, putting power grids under strain as consumers in mega-cities like Shanghai and Shenzhen crank up air conditioners.