Oil Little Changed After US Officials Reach Tentative Debt Deal

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Oil was steady as traders wait to see if lawmakers approve a tentative US debt ceiling deal reached over the weekend to avert a catastrophic default.West Texas Intermediate futures traded above $72 a barrel after gaining 1.2% on Friday. President Joe Biden and House Speaker Kevin McCarthy voiced confidence that their agreement will pass Congress and reach the president’s desk for signature. Liquidity is thin so far in trading on Monday with the US and UK observing national holidays.Oil is about 10% lower this year as China’s lackluster economic recovery and the Federal Reserve’s aggressive monetary tightening weighed on the demand outlook. Russian supply has also been resilient, even after the nation said it would cut output, while domestic crude processing has dropped.

Supply dynamics remain in focus, with Saudi Arabia and Russia offering conflicting statements recently on the potential for changes to supply policy from OPEC+. The group meets in Vienna on June 3-4 to decide output levels.

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“The baseline expectation is that OPEC+ will keep quotas intact for the rest of the year,” said Ed Bell, senior director for market economics at Dubai-based lender Emirates NBD PJSC. That’s supportive of prices, though not enough to spur big trading moves, said Bell. “It’s likely to be a quiet day, which isn’t that instructive for taking price cues on what the market is expecting.”

Prices:

WTI for July delivery slipped 0.1% to $72.59 a barrel at 11:54 a.m. in London.
There will be no settlement Monday due to the US Memorial Day holiday and trades will be booked on Tuesday.
Brent for July settlement declined 0.3% to $76.75 a barrel