Brent dips slightly after US debt ceiling bill passes vote

The front-month ICE Brent contract has dipped by a marginal $0.15/bbl on the day, to $72.82/bbl at 09.00 GMT.

PHOTO: Crude oil barrels. Getty Images

Upward pressure:

Brent has drawn support from tentative optimism over US oil demand. A contested bill has passed a vote in the US House of Representatives to suspend the country's $31.4 trillion debt ceiling. This will likely mean the US can avoid defaulting on its growing debt and steer clear of an economic meltdown from running out of cash.

US Federal Reserve governor and vice chair nominee Philip Jefferson has indicated that the central bank's interest rate hikes could be paused in June. A rate hike "skip" would counter market expecations of another hike, and could provide the US economy with a bit of breathing space against a backdrop of slow economic growth.

“Oil markets may have been oversold in the last two trading days due to the sluggish Chinese data and debt ceiling concerns. Sentiments rebounded amid the debt bill’s passage in the House and Fed’s rate hike pause signal also offered a rebounding opportunity,” commented CMC Markets analyst Tina Teng.

Downward pressure:

Saudi Arabian oil giant Aramco could cut its official selling prices (OSPs) all crude grades to Asia in July by $1/bbl to a 20-month low, reports Reuters.

Demand indications from the world’s largest oil importer China continue to be mixed after it released weaker-than-expected manufacturing and services data for May, provoking the market to worry about a lag in demand.

US crude oil inventories grew by about 5.2 million bbls last week, according to an estimate from the American Petroleum Institute (API). The build countered the 1.2 million-bbl draw expected by analysts, says Oilprice.com.

By Aparupa Mazumder 

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