Oil prices rise in early trade

11 May 2023 , 08:40 AM

Early Asian trading on Thursday saw an increase in oil prices as strong fuel demand in the U.S. overshadowed worries about a potential debt default by the world’s largest user and producer of oil.

Brent crude futures were up 26 cents, or 0.34%, to $76.67 per barrel. Futures for U.S. crude increased 28 cents to $72.84.

Consumer prices increased in April, according to the most recent American data, increasing the possibility that the Federal Reserve will keep interest rates higher. This could reduce the demand for oil as a result. With speculators fearing a recession, rising global interest rates have put pressure on oil prices recently.

The U.S. fuel demand, though, appears to be strengthening.

Last week, the United States’ petrol stockpiles decreased by 3.2 million barrels, a significant increase over the analysts’ predicted 1.2 million barrel decline. According to information released by the US Energy Information Administration on Wednesday, distillate stockpiles also decreased. [EIA/S]

The demand for jet fuel in the US reached its highest level since December 2019.

Republicans are still insisting on expenditure cutbacks as comprehensive negotiations to raise the $31.4 trillion debt ceiling for the US government began on Wednesday.

As Wall Street becomes more concerned about the possibility of an unprecedented default, the standoff has alarmed investors and driven up the cost of insurance exposure to U.S. government debt to record highs.

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