Crude oil futures closed above $70 on Thursday (June 1) following the US House of Representatives’ approval of a bill to increase the debt ceiling. Investors also awaited the outcome of the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC Plus, scheduled for this Sunday.
WTI crude futures experienced a significant rise of $2.01, or 2.95%, concluding at $70.10 per barrel. Similarly, BRENT crude futures increased by $1.68, or 2.31%, reaching $74.28 per barrel.
The US House of Representatives successfully passed the bill to raise the debt ceiling with 314 votes in favor and 117 votes against. The bill has now been forwarded to the Senate for consideration. If approved by the Senate, it will be sent to President Joe Biden for signing into law. The completion of this process is crucial before the June 5 deadline to avoid a historic default by the United States.
The progress made in passing the bill to increase the debt ceiling acted as a supportive factor for the market, overshadowing the negative impact of a report released by the US Energy Information Administration (EIA). The report indicated a 4.5 million barrel increase in US crude inventories last week, contrary to analysts’ expectations of a 3.4 million barrel decrease.
Furthermore, distillate stocks, including heating oil and diesel, rose by 1 million barrels, defying predictions of a 280,000 barrel drop by analysts. Gasoline inventories, on the other hand, fell by 200,000 barrels, falling short of the anticipated 500,000 barrel decrease.
Investors closely monitored the outcomes of the OPEC Plus meeting, which was set to take place on Sunday, June 4. Previously, the oil market faced pressure when Russian Deputy Prime Minister Alexander Novak expressed reluctance to further oil production cuts during the meeting, as was done last month. Some member countries have recently announced voluntary production cuts.
The oil market experienced a surge in prices above $70 as progress on the debt ceiling law provided support. Additionally, the upcoming OPEC Plus meeting added to the market’s anticipation, with stakeholders awaiting decisions regarding oil production. Investors will continue to monitor these developments closely in the days to come.
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Friday, June 2, 2023