Oil Rises After Biden-McCarthy Talks

Oil rose after U.S. leaders including President Joe Biden broadly sounded positive tone about resolving the debt ceiling impasse, boosting risk appetite. U.S. crude rose 0.5% on Monday to above $72 a barrel. House Speaker Kevin McCarthy said he and Biden had productive talks but that no deal had been struck to avert a default. Ahead of the meeting, Treasury Secretary Janet Yellen had warned that her department was likely to run out of cash by early June. The showdown in Washington has dominated commodity sentiment in recent days as the talks continue down the line. A U.S. default risks financial and economic disruption that would jeopardize energy demand. Crude has fallen nearly 10% this year, as China’s lackluster recovery after abandoning its zero-Covid policy and the Fed’s most aggressive monetary tightening campaign have combined to weigh on sentiment. Russia’s oil exports also remained robust, with flows showing no signs of the production cuts the country has insisted on. Fed Chair Jerome Powell previously signaled in June that interest rate hikes would be paused, while other central bank officials said they saw the need to raise borrowing costs further, potentially weighing on energy demand. “Oil is holding up relatively well despite little progress in U.S. debt ceiling negotiations and more hawkish comments from U.S. Fed officials,” said Warren Patterson, head of commodity strategy at ING Groep NV.