© Reuters. FILE PHOTO: A tug boat pushes an oil barge through New York Harbor past the Statue of Liberty in New York City, U.S., May 24, 2022. REUTERS/Brendan McDermid
By Shadia Nasralla
LONDON (Reuters) – Oil prices rose on Friday after a U.S. debt ceiling deal averted a default in the world’s biggest oil consumer and jobs data indicated a possible rate hike pause, while attention turned to a meeting of OPEC ministers and their allies at the weekend.
futures were up $1.88, or 2.5%, at $76.16 a barrel by 1328 GMT, while U.S. West Texas Intermediate crude (WTI) rose $1.85, or 2.6%, to $71.95 a barrel. Still, both contracts were headed for their first weekly loss in three weeks.
Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.
Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar, making oil cheaper for holders of other currencies. [FRX/]
U.S. employment increased more than expected in May, but a moderation in wages could allow the Federal Reserve to skip an interest rate hike this month for the first time since embarking on a policy tightening campaign more than a year ago.
Investor attention is also fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.
OPEC+ in April announced a surprise cut of 1.16 million barrels per day, but the gains from that move have since been retraced and prices are below pre-cut levels.
Sources told Reuters fresh output cuts are unlikely.
On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month below 50, indicating a contraction in activity.
Meanwhile, manufacturing data out of China, the world’s second biggest oil consumer, painted a mixed picture.