Oil Futures Settle Sharply Higher On Optimism Over Demand, Debt Ceiling Deal

Crude oil prices rose sharply on Wednesday on expectations of higher demand and amid optimism over U.S. debt ceiling negotiations.

The International Energy Agency (IEA) said in its report on Tuesday that it expects demand would outpace supply by 2 million barrels per day in the second half of the year, with China contributing up to 60% of oil demand growth.

Optimism lawmakers will eventually reach an agreement on raising the U.S. debt ceiling contributed as well to oil’s uptick.

A statement from the White House described the meeting as “productive” and said Biden is “optimistic that there is a path to a responsible, bipartisan budget agreement.”

Biden directed staff to continue to meet daily on outstanding issues, with the president cutting short an upcoming overseas trip to ensure Congress takes action by the June 1st deadline to avert default.

House Speaker Kevin McCarthy, R-Calif., told reporters following the meeting that the two sides remain “far apart” but said it is “possible to get a deal by the end of the week.”

West Texas Intermediate Crude oil futures for June ended higher by $1.97 or about 2.8% at $72.83 a barrel.

Brent crude futures gained $2.05 or about 2.7% to $76.97 a barrel.

Data released by the Energy Information Administration (EIA) today showed crude inventories in the U.S. rose by 5 million barrels in the week ended March 12.

The EIA data showed gasoline stocks dropped by 1.38 million barrels last week, while distillate stockpiles increased by 0.080 million barrels.

Data released by the American Petroleum Institute (API) on Tuesday showed U.S. crude inventories rose by around 3.6 million barrels in the week ended May 12.

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