Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude oil soars on debt ceiling progress; OPEC+, Fed meeting in focus

Published 02/06/2023, 11:12 pm
Updated 02/06/2023, 11:12 pm
© Reuters.

© Reuters.

Investing.com -- Oil prices rose sharply Friday after the U.S. debt ceiling deal passed through Congress, averting a default ahead of the weekend’s meeting of OPEC ministers and their allies at the weekend.

By 09:00 ET (13:00 GMT), U.S. crude futures traded 2.3% higher at $71.69 a barrel, while the Brent contract rose 2.2% to $75.90 a barrel.

The U.S. Senate approved a bill to lift the country’s $31.4 billion debt ceiling late Thursday, the day after the House of Representatives did the same.

The agreement now heads to the White House, with President Joe Biden just having to sign the deal to stave off a sovereign default that would have had severe economic repercussions globally.

“The approval of the debt ceiling deal in the U.S. Congress has helped bolster broader economic sentiment and supported commodity prices.” analysts at ING said, in a note.

Traders are also looking to see what the Federal Reserve decides to do with its monetary policy at its meeting later this month, having signaled the possibility of a pause in rate hikes at its last meeting.

Data from the Labor Department's Bureau of Labor Statistics on Friday showed that the world's largest economy added 339,000 jobs last month, up from the revised 294,000 in April, the best figure since January. Economists had seen the figure at 180,000.

However, the unemployment rate ticked up to 3.7% from 3.4% in April and average hourly earnings grew by only 0.3% after advancing 0.5% in the prior month.

Fed officials will take a close look at these mixed numbers, and should be encouraged by the smaller-than-expected growth in wages as this should translate into less pressure on prices going forward.

The Fed agreeing to a pause would weigh on the U.S. dollar, making oil cheaper for holders of other currencies. 

The weekend sees a meeting of the Organization of Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, to decide future oil production levels.

The group of major producers decided to voluntarily cut output levels when they last met in April in order to boost prices, and may feel the need to do something similar given the fall in oil prices toward $70 per barrel this week.

However, Reuters reported Friday that the cartel is unlikely to decide on further oil supply cuts, having pledged further voluntary cuts at the last meeting in April, adding to a 2 million barrels per day reduction agreed last year.

OPEC+ pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.