Brent oil fluctuated as investors watched for progress on lobbying to win approval for a US debt-ceiling deal to avert a default.
The global benchmark traded below $77 a barrel after closing 0.2% higher on Monday. White House and Republican congressional leaders stepped up efforts to urge lawmakers to support the bill, with President Joe Biden and House Speaker Kevin McCarthy expressing confidence an accord will be ratified.
Oil is still around 10% lower this year as China’s lackluster economic recovery following the end of Covid Zero and the Federal Reserve’s aggressive monetary tightening campaign weighed on the demand outlook. Russian supply has also been resilient, even after the nation said it would cut output.
Traders will be on the lookout for further signals about supply from the OPEC+ coalition before the group meets June 3-4 to set its output policy. Saudi Arabia and Russia recently offered conflicting signals on the potential for the collective to alter its production levels.
“With broad expectations seemingly pricing for abating US debt default risks, the question will be what comes after in order to drive a more sustained rally,” said Yeap Jun Rong, market strategist for IG Asia Pte. A weak economic outlook and robust Russian oil output are keeping a lid on prices, he added.
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