LONDON, June 1 (Reuters) – Oil held steady on Thursday as a possible pause in US rate hikes and the passage of a crucial vote on the US debt ceiling bill were offset by a report on rising inventories among the world’s largest oil consumer.
U.S. Federal Reserve officials suggested on Wednesday that interest rates could be put on hold this month and the U.S. House of Representatives passed a bill that would suspend the government’s debt ceiling, boosting the chances of averting catastrophic bankruptcy.
Brent crude oil futures fell 10 cents, or 0.14%, to $72.50 a barrel by 1339 GMT, while US West Texas Intermediate crude (WTI) rose 7 cents, or 0.1% to $68.16. Both benchmarks fell on Tuesday and Wednesday.
“Oil markets may have been oversold for the past two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the House debt bill approval and (the) Fed’s pause signal to pause the rate hike.”
Mixed demand indications from China, the world’s largest oil importer, have nevertheless weighed on the market, as has industry data showing a rise in US crude inventories.
Market sources citing figures from the American Petroleum Institute (API) on Wednesday said U.S. crude inventories rose by about 5.2 million barrels last week. Government stocks will be available at 1430 GMT on Thursday.
“The current mood is one of pessimism,” says Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse lately.”
Also at the center is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, will discuss whether or not oil production should be cut further.
Four alliance sources told Reuters that OPEC+ is unlikely to deepen supply restrictions at their ministerial meeting on Sunday, despite oil prices falling towards $70 a barrel.
These price levels are “not at all comfortable” for OPEC+ members, said Ole Hansen, head of commodity strategy at Saxo Bank.
“If no price-supportive action is taken at this weekend’s OPEC+ meeting, oil prices could fall further, but overall we see downside risk as contained with last month’s output cuts not yet fully felt and priced in,” he said. Hansen said.
Reporting by Alex Lawler and Rowena Edwards in London Additional reporting by Arathy Somasekhar in Houston and Andrew Hayley in Beijing Edited by David Goodman, Kirsten Donovan