BEIJING (Reuters) – Oil prices rose on Friday amid bullish sentiment following the passage of a U.S. debt ceiling bill in Washington, while markets weighed the likelihood of price-supportive OPEC+ production cuts over the weekend.<\/p>\n\n\n\n
Brent crude\u00a0futures rose 71 cents, or 0.96% to $74.99 a barrel by 0600 GMT, while U.S. West Texas Intermediate crude (WTI) rose 66 cents, or 0.94%, to $70.76, following two consecutive days of losses.<\/p>\n\n\n\n
Markets were reassured by Congress’ passage of a bill suspending the U.S. government’s $31.4 billion debt ceiling, as well as by earlier signals of a potential pause in rate hikes by the Federal Reserve.<\/p>\n\n\n\n
The bill was approved by the Senate on Thursday night U.S. time, staving off a calamitous sovereign default that would have rocked global financial markets.<\/p>\n\n\n\n
Market sentiment was also buoyed by Thursday’s\u00a0U.S. crude\u00a0stock data from the Energy Information Administration, which indicated that crude imports had jumped last week.<\/p>\n\n\n\n
Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.<\/p>\n\n\n\n
Ministers from key oil producing countries will decide whether to further trim output to support government revenues.<\/p>\n\n\n\n
Further reductions in OPEC+ output following their surprise cut of 1.16 million barrels per day in April would be bullish for crude prices.<\/p>\n\n\n\n
Signals on any such cut have been varied, with Reuters reporting and analysts from banks including HSBC and Goldman Sachs (NYSE:GS) indicating that further output cuts are unlikely and that the bloc would adopt a “wait and see” approach.<\/p>\n\n\n\n
Other market observers have pointed to weak manufacturing data out of China and the U.S. as making OPEC+ cuts more likely.<\/p>\n\n\n\n
“Oil prices are stabilizing after a round of disappointing global manufacturing data supported the case for OPEC+ to deliver another production cut,” said Edward Moya, a senior market analyst at OANDA.<\/p>\n\n\n\n
In the U.S., Institute for Supply Management (ISM) said on Thursday that its manufacturing PMI fell to 46.9 last month from 47.1 in April, the seventh-straight month that the PMI stayed below the 50 threshold, indicating a contraction in manufacturing activity in the world’s largest oil consumer.<\/p>\n\n\n\n
Manufacturing data out of China painted a mixed picture, with Thursday’s better-than-expected Caixin\/S&P Global China manufacturing PMI contrasting with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.<\/p>\n\n\n\n
However, traders are “thinking that Russia might not necessarily stick to a hard stance on output cuts, especially since they are struggling to commit to their quotes,” Moya added.<\/p>\n