US President Joe Biden announced on Friday that he would sign on Saturday a measure authorizing an increase in US government borrowing, removing the catastrophic threat of default hanging over the world’s largest economy.
“I will sign tomorrow,” Biden said, addressing the nation from the Oval Office, adding, “Nothing would be more irresponsible and nothing would be more catastrophic” than a default.
Oil prices rose more than 2%, Friday, with the support of the US Congress’ approval of the debt ceiling agreement that prevents the government in the world’s largest oil consumer from defaulting on its debt, as well as the publication of job data that raised hopes of a possible halt to raising interest rates in the United States.
The focus now turns to the OPEC+ meeting on June 4.
Brent crude futures rose $1.85, or 2.5%, to $76.13 a barrel upon settlement, and US West Texas Intermediate crude futures rose $1.64, or 2.3%, to $71.74 upon settlement.
The US Senate passed the debt ceiling bill on Thursday evening, averting a catastrophic debt default that would have jolted the financial markets.
US employment increased more than expected in May, but a diminishing rise in wages may allow the US central bank to skip an expected hike in interest rates this month for the first time in more than a year, which could support demand for oil.
Oil traders will be watching the June 4 meeting of the OPEC+ alliance, which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia.
The group had announced in April a sudden production cut of 1.16 million barrels per day, but the price gains resulting from the reduction have faded and crude oil is currently trading below pre-cut levels.
Two sources in OPEC + said that they will discuss possible options for its next meeting, including the possibility of announcing an additional reduction of about one million barrels per day.