ISLAMABAD
Oil futures surged for the second week in a row amid optimism over the fading risk of a US debt default due to signs of progress in talks, and rose up to 1.7 percent as compared to previous week. Both major global benchmarks Brent and WTI posted a second week of gains, with Brent climbing 1.7 percent and WTI appreciating by 1.6 percent. Brent, the international benchmark for two-thirds of the world’s oil, surged to $76.95 from $75.58 on a week-on-week (WoW) basis. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up to $72.67 from $71.55 on a weekly basis. Brent and WTI registered 1.9 percent and 2.16 percent gains respectively on a week-on-week basis in the preceding week.
The price of Russian Sokol decreased by $1.98 (-2.95 percent) to $65.21 from $67.19 on WoW basis. Similarly, Arab Light prices witnessed a decrease of $0.22 (-0.28 percent) to reach $77.41 from $77.63 a barrel on a weekly basis.
However, the price for Opec Basket increased from $76.06 to $76.94 on a week-on-week basis, showing an uptick of $0.88 (+1.16 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
The oil prices moved north as officials in the United States appeared close to striking a debt ceiling deal before the June 1 deadline. It is possible that negotiators will reach a deal to raise the US government’s $31.4 trillion debt ceiling with the possibility that talks could easily spill over into the weekend. US Treasury Secretary Janet Yellen said the government is likely to run out of money to pay its bills on June 5, four days later than she previously predicted.
The supply dynamics remained in focus last week, with Saudi Arabia and Russia offering conflicting statements on the potential for more cuts from the Organisation of the Petroleum Exporting Countries, OPEC and its allies including Russia (OPEC+). Russian Deputy Prime Minister Alexander Novak said that OPEC+ wasn’t likely to take further measures at its gathering in Vienna in June.
His view contrasts that of Saudi Energy Minister Prince Abdulaziz bin Salman, whose remarks earlier in the week indicated that speculators should “watch out.”
The total number of total active drilling rigs in the United States fell by 9 this week, after falling by 11 last week and 17 the week before that. The total rig count fell to 711 this week—16 rigs below this time last year. The current count is 364 fewer rigs than the rig count at the beginning of 2019, prior to the pandemic. Crude oil production levels in the United States rose in the week ending May 19, back to 12.3 million bpd, according to the latest weekly EIA estimates. The US production levels are up just 400,000 bpd versus a year ago.
