Oil stabilizes amid progress on U.S. debt bill and increased inventories.

Oil Steadies as U.S. Interest Rates and Debt Ceiling Bill Take Center Stage

By Alex Lawler

LONDON (Reuters) – Oil steadied on Thursday as a potential pause in U.S. interest rate hikes and the passing of a crucial vote on the U.S. debt ceiling bill were offset by a report of rising inventories in the world’s biggest oil consumer.

U.S. Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the U.S. House of Representatives passed a bill suspending the government’s debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures rose 2 cents to $72.62 a barrel by 1026 GMT while U.S. West Texas Intermediate crude (WTI) gained 3 cents to $68.12. Both benchmarks fell on Tuesday and Wednesday.

“Oil markets may have been oversold in the last two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the debt bill’s passage in the House and (the) Fed’s rate hike pause signal.”

Mixed Demand Indications and Rising Inventories Weigh on Market

Mixed demand indications from China, the world’s biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in U.S. crude inventories.

“The current mood is one of pessimism,” said Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse of late.”

Market sources citing American Petroleum Institute (API) figures on Wednesday said that U.S. crude inventories rose by about 5.2 million barrels last week. Government stocks data is due at 1430 GMT on Thursday. [EIA/S]

Also in focus is the June 4 meeting of the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia after mixed signals on whether further production cuts are likely.

(Reporting by Alex Lawler Additional reporting by Arathy Somasekhar in Houston and Andrew Hayley in Beijing Editing by David Goodman)

Other Headlines

• China postures against a timid Biden Administration.
• Mike Pence is planning to enter the 2024 presidential race next week. Reports say the former vice president will launch his campaign next Wednesday with a rally in Des Moines, Iowa.
• The White House announces another round of aid for Ukraine. Today National Security Spokesman John Kirby affirmed Russia has continued to wage a brutal and unprovoked war against Ukraine.
• If the House passes the debt ceiling bill today, as Speaker McCarthy believes it will, the bill will then proceed to the Senate where it will require 60 votes before it can be sent to President Biden’s desk.
• Apple Inc supplier Foxconn will start manufacturing iPhones in the southern state of Karnataka by April 2024, the state of Karnataka’s minister of large and medium industries said on Thursday, as Apple seeks to diversify its supply chain beyond China.
• An Italian senator has surprised his colleagues by reading out in parliament a speech drafted by a chatbot, saying it highlighted the need for lawmakers to protect jobs as automation takes over. The speech was drafted by an algorithm developed by the Institute of Computational Linguistics in Pisa.