- WTI crude oil closes higher, settling at US$72.67 per barrel, driven by mixed signals from OPEC+ regarding production cuts.
- Ongoing talks between the Biden Administration and House Republicans bring relief as a deal to raise the US debt ceiling nears completion.
- US inflation surges as consumer spending exceeds expectations, with the personal consumption expenditures index rising by 4.4% annually.
Western Texas Intermediate (WTI), the US crude oil benchmark, recovered some lost ground during the week, driven by factors like mixed signals from OPEC+ regarding potential output cuts, ongoing discussions between US politicians about the debt ceiling, and higher-than-expected US inflation.
Mixed signals from OPEC+, progress in US debt-ceiling talks, and higher inflation are impacting the rise of WTI crude oil prices
WTI crude oil trades with gains of $0.99 or 1.35% after hitting a daily low of $71.54, exchanging hands at $72.75 per barrel.
The rise in oil prices comes as conflicting statements emerged from OPEC+’s significant producers. Russia expressed its expectation that there would be no alteration to production quotas during the cartel’s meeting, citing the voluntary cuts of over one million barrels per day implemented at the beginning of May. Conversely, Saudi Arabia’s oil minister cautioned short sellers to remain vigilant.
The upward trajectory of oil prices also corresponds with reports of progress in negotiations between the Biden Administration and House Republicans concerning a deal to raise the US debt ceiling for two years. This development alleviates concerns that the country would face an unprecedented default on its debt payments.
However, recent data from the US reveals stronger-than-expected consumer spending in the previous month, which increased by 0.5% following a stagnant performance in March. Additionally, the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, rose by 4.4% annually, surpassing the 4.2% growth reported in March.