Oil markets regained some of their gains in early Asian trading on Friday as traders engaged in short-covering ahead of the weekend; however, uncertainty surrounding the U.S. debt ceiling and renewed concerns about a banking crisis in the United States limited the gains. By 00:51 GMT, Brent crude futures rose by 36 cents, or 0.5 percent, to $75.34 per barrel. U.S. crude futures increased by 41 cents, or 0.6 percent, to $71.28. Both grades recovered from losses ranging between three and four percent over the past two sessions.
For the week, both crude types are poised for a slight change after a three-week decline. Hiroyuki Kikukawa, the head of NS Trading affiliated with Nissan Securities, stated that "traders covered short positions ahead of the weekend, but worries over the political confrontation regarding the U.S. debt ceiling and increasing fears of a regional banking crisis in the United States limited the gains." He added, "With ongoing concerns about the slow recovery of Chinese fuel demand, it is likely that downward pressure will continue in the market next week."
Kikukawa went on to say, "Prices will receive support from speculation that the U.S. might buy oil for the Strategic Petroleum Reserve if West Texas Intermediate falls to around $70 per barrel." The U.S. government has stated it will purchase oil when prices stabilize in the range of $67 to $72 per barrel or lower. U.S. Treasury Secretary Janet Yellen urged Congress on Thursday to raise the government's debt ceiling of $31.4 trillion and to avoid an unprecedented default that could lead to a global economic recession.
