Oil rose after US House Speaker Kevin McCarthy said he and President Joe Biden had a productive talk to solve the debt-limit impasse, although a deal to avert a potentially catastrophic default has yet to be struck.
West Texas Intermediate for July rose above $72 a barrel after that contract gained 0.5% on Monday. Before the meeting, Treasury Secretary Janet Yellen had warned that it was now highly likely her department would run out of sufficient cash in early June. McCarthy said negotiators would work overnight.
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Crude has retreated by about 10% for the year as China’s lackluster recovery after it abandoned Covid Zero, and the US Federal Reserve’s most aggressive monetary tightening campaign in a generation, weighed on sentiment. Also, Russian oil exports have remained robust, with flows not yet showing signs of the output cuts that the country insisted it was making.
In addition to the US debt talks, oil traders will be on alert for comments scheduled later Tuesday from Saudi Arabian Energy Minister Prince Abdulaziz bin Salman at the Qatar Economic Forum. Saudi Arabia, the de facto leader of the OPEC+ cartel, was among nations that surprised the global crude market recently with a supply cut that started to take effect from this month.
