Oil Prices Rise 2% on Optimism for Demand and US Debt Ceiling Negotiations

Oil prices rose 2 percent on Wednesday, as optimism about oil demand and negotiations to raise the US debt ceiling outweighed supply concerns. Brent crude futures rose $1.48, or 2 percent, to $76.39 a barrel by 16:56 GMT. US West Texas Intermediate crude also rose $1.50, equivalent to 2.1 percent, to $72.36. Yesterday, the International Energy Agency expected that demand for oil would exceed supply by two million barrels per day in the second half of the year, and that China would account for about 60 percent of oil demand growth in 2023. “It is estimated that China will account for about 60 percent of oil demand growth in 2023,” said Bob Yawger, director of energy futures trading at Mizuho. The International Energy Agency has restored optimism to the market this morning. The negotiations regarding the US debt ceiling preoccupied the minds of market participants, who were optimistic about the statements of US House Speaker Kevin McCarthy on Wednesday, in which he pledged to avoid what would be a catastrophic default. Optimism overshadowed the increase in US crude oil stocks by five million barrels in the week ending May 12, as announced by the US Energy Information Administration today. Analysts had expected, in a Reuters poll, a decrease of 900,000 barrels. And the increase in crude stocks reinforced concerns about growth in the United States, after data showed that retail sales rose 0.4 percent in April, which was below expectations for a 0.8 percent rise.