Oil rises as US interest rates pause and debt ceiling bill passes
Oil prices rose on Thursday, reversing previous losses, as a possible pause in US interest rate hikes and the debt ceiling bill passing a crucial vote reaffirmed optimism about greater fuel demand growth in the world's largest oil consumer.
Brent crude futures for August rose 32 cents, or 0.44%, at 0518 GMT to $72.92 a barrel, while West Texas Intermediate crude (WTI) rose 25 cents, or 0.37%, to $68.34 a barrel.
Federal Reserve officials on Wednesday signaled a pause in raising interest rates in June, contrary to market expectations for an increase that could slow economic growth and weaken oil demand.
Additionally, the U.S. House of Representatives passing a bill suspending the U.S. government's $31.4 trillion debt ceiling increased the chances of avoiding a catastrophic government default.
Both benchmarks had fallen sharply in the previous sessions, with Brent down 5.6% and WTI 6.3% at the close of Wednesday compared to last Friday.
Oil markets may have been oversold in the last two trading days amid stagnant Chinese data and debt ceiling concerns. Sensitivity rebounded after the debt bill passed the House, and the Fed's signal to pause the rate hike presented an opportunity for recovery.
Demand indicators from China, the world's largest oil importer, have been mixed this week.
Official government data on Wednesday reported that factory activity fell to a five-month low in May, while service sector activity expanded at its slowest pace in four months.
However, the global China manufacturing purchasing managers' index (PMI) rose to 50.9 in May from 49.5 in April on Thursday, easing concerns over China's industrial demand.
Prices are also struggling to overcome downside supply factors.
U.S. crude inventories increased by about 5.2 million barrels last week, according to market sources citing Wednesday's figures from the American Petroleum Institute (API).
Gasoline inventories also increased by about 1.9 million barrels last week, while distilled fuel inventories increased by 1.8 million barrels, according to API data.
Market participants are awaiting official EIA data on US crude inventories to be released later on Thursday. Data were delayed by one day due to a holiday in the US earlier this week.
Investors are also watching with mixed signals as to whether further cuts will be made at the June 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia.
Some analysts say they do not expect OPEC+ to announce further cuts at this meeting.
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