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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Set For Their First Weekly Gain In A Month

  • Oil prices are on course for their first weekly gain in a month, with both West Texas Intermediate and Brent trading higher early on Friday morning.
  • President Biden has reiterated that the U.S. will not default and that current negotiations are about the outlines of the budget and not the debt ceiling.
  • As well as renewed optimism about the U.S. lifting the debt ceiling, signs of strong fuel demand in the U.S. ahead of driving season also bolstered oil prices.
Oil prices

Crude oil prices look set to record their first weekly gain since mid-April as sentiment about future demand improves amid signs there may be progress on the debt ceiling negotiations in Congress.

On Thursday, President Biden and House Speaker Kevin McCarthy said they would negotiate directly on lifting the debt ceiling, sparking hopes that a default would be avoided.

"We're going to come together because there's no alternative," President Biden said, as quoted by Reuters. "To be clear, this negotiation is about the outlines of the budget, not about the whether or not we're going to (pay our debts). The leaders (of Congress) have all agreed: We will not default. Every leader has said that."

As a result, oil prices inched up, with West Texas Intermediate gaining some 3% since the start of the week, according to Bloomberg.

At the time of writing, WTI was trading at a little over $72 per barrel, while Brent crude was changing hands at around $76.50 per barrel. Both remain down 10% since the start of the year, however.

In addition to debt ceiling optimism, prices got some support from the fact that driving season is around the corner with demand expected to pick up in accordance with usual seasonal variation. Some additional support was also provided by the Department of Energy when it announced it planned to buy 3 million barrels of oil for the strategic petroleum reserve, an IG analyst told Bloomberg.

On the flip side, U.S. leading economic indicators suggested the economy is gathering pace, which in turn reignited fears of more rate hikes as it pushed the greenback to the highest in two months.

"Good news for the economy is now bad news for the crude demand outlook as economic resilience will force the Fed to kill the economy," OANDA analyst Edward Moya told Reuters.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on May 19 2023 said:
    Oil prices will continue to be under pressure until fears about a global banking or financial crisis resulting from worries about US banking system and rising US debt levels start to subside.

    Once this happens, oil prices will recoup all their recent losses and resume their surge towards 90 dollars a barrel sometime in 2023.

    Dr Mamdouh G Salameh
    International oil economist
    Global energy expert

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