Crude oil prices surge in early trade

23 May 2023 , 08:44 AM

Despite worries about the possibility of a U.S. government default, oil prices rose for a second day on Tuesday as investors anticipated a tighter market driven by seasonal increases in petrol demand and production curbs from OPEC+ countries.

Brent oil futures were up 20 cents, or 0.3%, to $76.19 per barrel, while U.S. West Texas Intermediate (WTI) crude was up 21 cents, or 0.3%, to $72.26 per barrel.

Prior to the Memorial Day vacation on May 29, which normally ushers in the high summer fuel demand season, U.S. petrol futures jumped 2.8%, lifting both Brent and WTI.

The US Department of Energy said this week that it would restock the SPR with 3 million barrels of crude oil for delivery in August.

Oil markets are also anticipated to remain tight due to this month’s implementation of voluntary production restrictions by the Organisation of the Petroleum Exporting Countries and its partners, including Russia, collectively known as OPEC+.

However, investors are also paying attention to talks to increase the U.S.’s debt ceiling because it is the largest user of oil in the world.

With just 10 days left until a potential default, President Joe Biden and House Speaker Kevin McCarthy decided to stop their meetings on Monday without reaching an agreement on how to raise the $31.4 trillion debt ceiling for the United States government.

A U.S. default would probably result in financial market pandemonium and a rise in interest rates, which would have an effect on domestic and international fuel demand growth.

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