Oil prices jumped on Monday as traders weighed a preliminary agreement on the US debt ceiling that would prevent a default by the main consumer, and further hikes in interest rates. Interest from the Fed which could reduce demand.
Brent North Sea crude futures rose 12 cents, or 0.16%, to $77.07 a barrel, while West Texas Intermediate crude rose 25 cents, or 0.3%, to $72.92 a barrel.
Petroleos Mexicanos (Pemex) did not publish data on Mexican blending due to a reduction in prices due to the Memorial Day holiday in the United States.
Both WTI and Brent North Sea prices went up and down. Monday was marked as a public holiday in the United Kingdom and the United States.
“Enthusiasm over the debt deal is fading as concerns grow over another rate hike by the Federal Reserve in June,” brokerage Liquidity Energy LLC wrote in a note.
Gabriela Siler, director of analysis at Banco Base, wrote that the session was characterized by lackluster economic indicators and low liquidity as many financial markets remained closed.
US President Joe Biden and House Speaker Kevin McCarthy reached an agreement over the weekend to suspend the $31.4 billion debt ceiling and limit public spending for the next two years.
However, analysts believe that this increase in oil price will be short-lived.
According to the CME’s FedWatch tool, markets now look at 25 basis points of a hike in rates to 50% at the Federal Reserve’s June 13-14 meeting, compared with 8.3% a month ago.
“The price of WTI oil is down 4.87% this month given the risk of lower demand, the United States economy could enter recession and slower growth is expected in China,” said Gabriela Siler.
So far this year, WTI has declined by 9.15%, while Brent has declined by 10.29% in the same period.
