Oil futures: Crude drifts amid uncertainty on US debt deal, OPEC+

29 May 2023

Quantum Commodity Intelligence – Crude oil futures Monday were drifting sideways as earlier optimism after the US reached a tentative debt-ceiling agreement gave way to uncertainty, with any deal still having to find bipartisan support and pass Congress.

Aug23 ICE Brent futures were trading at $77.10/b (1710 GMT), compared to the day's range of $76.16-$77.83/b and Friday’s settle of $76.98/b, while Jul23 was $77.06/b heading towards expiry.  

At the same time, Jul23 NYMEX WTI was trading at $72.96/b versus the day's range of $72.04-$73.55/b and Friday’s close of $72.67/b.

President Joe Biden and House Speaker Kevin McCarthy struck a deal over the weekend on raising debt levels, with Congress set to vote this week and a positive outcome averting a potential default.

Both leaders expressed confidence Sunday that members of the Democratic and Republican parties will support the deal.

However, there is no certainty the current deal will go through, while the threat of further interest rate hikes continues to weigh on markets.

Florida Governor and Republican candidate Ron DeSantis attacked the bipartisan deal to raise the debt ceiling Monday, saying the country was “careening towards bankruptcy” and lashed out a “massive” amount of spending in the deal.

Both the US and UK were closed for national holidays on Monday, with only exchanges open for business.


On oil fundamentals, the upcoming early June OPEC+ meeting is increasingly coming into focus, in particular a potential policy clash between Saudi Arabia and Russia.

The Wall Street Journal reported rising tensions between Riyadh and Moscow amid concerns Russia continues to pump and export crude above agreed levels, undermining efforts to bolster energy prices.

The report said Saudi officials have complained to Russian counterparts and asked them to respect the agreed cuts.

Russia had pledged to cut a further 500,000 bpd of output from March, which was matched by Saudi from May, but shipping data indicates little change in Russian exports.

On the products side, gasoline continued to lend support as cracks in New York Habour hit a 10-month high last week at over $35/b.

Northwest European gasoline cracks also ended last week at around six-week highs of $25/b over ICE Brent, just shy of April’s 2023-high of $25.79/b.

And in Asia, 92 RON gasoline cargoes topped out at a similar six-week high $12.32/b premium over ICE Brent in the middle of the week but eased to $10.73/b by the Friday close.

However, the three-week rise in diesel margins skidded to a halt last week, with LSGO cracks over Brent falling $1/b.