RIYADH: Crude prices surged on Monday as the US leader negotiated a tentative debt-ceiling deal, potentially averting a default in the world’s largest economy and oil consumer, but concerns about additional interest rate hikes limited gains.
Brent crude futures climbed 45 cents, or 0.6 percent, to $77.40 a barrel by 3:30 a.m. Saudi time, while US West Texas Intermediate crude was up 53 cents, or 0.7 percent, to $73.2 a barrel.
US President Joe Biden and House Speaker Kevin McCarthy forged an agreement over the weekend to suspend the $31.4 trillion debt ceiling and cap government spending for the next two years. Both leaders expressed optimism that members of the Democratic and Republican parties would vote in favor of the deal.
Reaching the deal and coming closer to avoiding a default on US debt renewed investor appetite for riskier assets such as commodities. Analysts said that the provisional deal had taken the pressure off the markets, which is offering a relief rally in risk assets, including crude oil.
Founder of oil market analysis provider Vanda Insights, Vandana Hari said that they could see more gains as a relief rally gets underway in the broader financial markets when the United States (US) comes back from the long Memorial Day weekend. Last week, WTI and Brent rose by more than 1 percent, gaining for a second week.
Asia’s Crude Imports Jump in May
As the region’s two major importers, China and India, suck up Russian cargo ships, Asia’s crude oil imports are on track for a robust revival in May. According to Refinitiv Oil Research, a total of 27.73 million barrels per day of oil is estimated to be offloaded at ports in the top-consuming region in May. This is an increase of 8.6 percent over the April figure of 26.39 million bpd and will be the highest result in 2023.
China, the world’s largest crude importer, is forecast to land 11.96 million bpd in May, up from a relatively mild 10.96 million in April and just below the 34-month high of 12.37 million bpd in March. Russian crude has also surpassed 1.68 million bpd in April, with imports rising to 1.97 million bpd in May. Russia now has a 38.6 percent market share of India’s total May import volume of 5.10 million bpd, the second-highest monthly import amount on record after April 2022.
