Oil prices climbed in early Asian trading on Monday after US leaders reached a preliminary agreement regarding the government debt ceiling, potentially averting a catastrophic default in the world's largest economy and biggest oil consumer.
By 23:17 GMT, Brent crude futures rose by 39 cents or 0.5% to $77.34 per barrel, while West Texas Intermediate crude futures increased by 45 cents or 0.6% to $73.12 per barrel.
On Saturday, US President Joe Biden and House Speaker Kevin McCarthy reached a preliminary agreement to suspend the government debt ceiling of $31.4 trillion. Both expressed confidence on Sunday that Democratic and Republican members of the House and Senate would support the agreement.
However, markets may only breathe a sigh of relief momentarily, as once the agreement is approved, the US Treasury is expected to issue bonds that could further reduce liquidity and increase financing costs for businesses already struggling due to rising interest rates.
Some investors remain cautious amid signs that the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, may consider implementing additional production cuts in their meeting scheduled for June 4th. Investors are also awaiting data on the manufacturing and services sectors in China this week, as well as non-farm payroll data in the US on Friday, in search of indicators of economic growth and oil demand.
