Oil rises on potential U.S. rate hike pause, debt bill passing

Oil prices rose on Thursday, reversing earlier losses, as a potential pause in U.S. interest rate hikes and the debt ceiling bill passing a crucial vote renewed optimism about further fuel demand growth in the world’s biggest oil consumer.

Brent crude futures for August rose 55 cents, to $73.15 a barrel, while U.S. West Texas Intermediate crude (WTI) rose 46 cents, or 0.68%, to $68.55 a barrel.

U.S. Federal Reserve officials on Wednesday pointed towards a potential rate hike “skip” in June that reversed market expectations of an imminent hike that could slow economic growth and weaken oil demand.

Additionally, the U.S. House of Representatives’ passage of a bill suspending the U.S. government’s $31.4 trillion debt ceiling improved the chances of averting a disastrous government default.

Both benchmarks had fallen steeply in the previous sessions, with Brent down 5.6% and WTI dropping 6.3% as of the close on Wednesday, from last Friday.

Demand indications from China, the world’s biggest oil importer, are somewhat mixed this week.

Official government data on Wednesday reported factory activity contracted in May to the lowest in five months, while service sector activity expanded at the slowest pace in four months.

However, the Caixin/S&P Global China manufacturing purchasing managers’ index (PMI) on Thursday showed a rise to 50.9 in May from 49.5 in April, tempering concerns about Chinese industrial demand.

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