Oil prices increased more than 3% during the week ending May 19 as optimism over raising the US debt ceiling offsets economic concerns.
International benchmark Brent crude was trading at $76.61 per barrel at 2.15 p.m. (1115 GMT) on Friday, posting a 3.31% jump from the Monday session that opened at $74.15 a barrel.
The American benchmark West Texas Intermediate (WTI) registered at $72.58 per barrel at the same time on Friday, rising 3.62% relative to the opening price of $70.04 a barrel on Monday.
Prices began the week on a negative note over fears about weak demand in the world’s largest oil-importing country, China.
Oil markets have been focused on China’s economic growth as the world’s second-largest economy attempts to recover from the COVID-19 pandemic’s two-year slump.
Prices fell on Monday as investors weighed Chinese central bank’s decision to keep interest rates unchanged, while fears of a weakening global economy continued to weigh on prices.
However, prices rallied on a revival in demand after the US Energy Department announced a plan to purchase up to 3 million barrels of oil for its Strategic Petroleum Reserve (SPR).
The US had sold oil from its emergency stockpiles several times to address the significant global supply disruption caused by the Russia-Ukraine war and to provide a wartime bridge by increasing domestic production.
The US Energy Department pointed to an analysis by the Department of the Treasury and said the move to sell SPR oil to stem rising energy prices managed to reduce gasoline prices by up to roughly $0.40 per gallon.
The government said the offers for August delivery of ‘sour crude oil’ will be submitted by May 31.
Prices also drew support from the threat of disruptions in Canada, with a rise in the number of wildfires in its main producing region.
– US debt ceiling talks in spotlight
Investors also closely watched talks on raising the US debt ceiling during the week. Optimism over raising the US debt ceiling offset fears about the economy.
US President Joe Biden said Wednesday he is ‘confident’ his team and congressional leaders will strike a deal to ensure the country does not default on its national debt.
As negotiations continue, Republican Speaker of the House of Representatives Kevin McCarthy said a bill to raise the US debt ceiling could be put to a vote as early as next week, offering hope that the White House and Congress will strike a deal.
Senate Majority Leader Chuck Schumer also said that the negotiations are currently progressing, and added that the Senate would consider voting on a deal following the US House of Representatives vote.
The US is facing a June 1 deadline to raise the debt ceiling—the amount the country is legally allowed to borrow—or face a default that would send shockwaves through the global economy. If no deal is agreed upon, the US could default on its $31 trillion debt on June 1, sparking fears of a recession with severe implications worldwide.
