Commodity Market: WTI Crude Oil rebounds as US debt default risk recedes

Futures on US West Texas Intermediate Crude Oil rose on Friday after an over 1% loss during the previous trading day on investor optimism the risk of a US debt default has diminished.

“I think markets have been pricing out the risks of a U.S. debt default, which translates to a more risk-on environment,” Yeap Jun Rong, market strategist at IG, was quoted as saying by Reuters.

“Once we get over the U.S. debt ceiling issue, fundamentals may eventually matter more to determine if any upward move can be sustained,” Yeap added.

US President Joe Biden and Speaker of the House of Representatives Kevin McCarthy had once again demonstrated their determination this week to reach an agreement to raise the $31.4 trillion federal debt ceiling.

But market sentiment remained mixed as inflation data could indicate further monetary policy tightening by central banks.

Dallas Federal Reserve President Lorie Logan and St. Louis Fed President James Bullard said on Thursday that US inflation did not seem to be slowing down sufficiently fast to allow the central bank to pause its rate hiking cycle.

As of 8:41 GMT on Friday WTI Crude Oil Futures for June delivery were gaining 0.46% to trade at $72.19 per barrel.

WTI Crude Oil Futures have risen 2.96% so far this week, following a 1.82% loss in the prior week.

At the same time, Brent Oil Futures for July delivery were gaining 0.47% on the day to trade at $76.22 per barrel.

Brent Oil Futures have risen 2.72% so far this week, following a 1.50% loss in the previous week.