Oil rose on Tuesday as support from a tighter market outlook due to a seasonal rise in gasoline demand and supply cuts from OPEC+ producers overshadowed investor concern over the risk of a U.S. debt default.
The gains added to a rally on Monday, when crude gained a tailwind from a 2.8% increase in U.S. gasoline futures ahead of the Memorial Day holiday on May 29 which traditionally marks the start of the peak summer demand season.
Brent crude was up 57 cents, or 0.8%, to $76.56 a barrel by 1102 GMT while U.S. West Texas Intermediate (WTI) crude gained 42 cents, or 0.6%, to $72.47.
As well as gasoline demand, the onset in May of voluntary production cuts by several members of the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, is also expected to tighten supply.
OPEC+ meets again on June 4, and some analysts see a chance of further cuts. Saudi Arabia’s energy minister said on Tuesday he would keep short sellers – those betting that prices will fall – “ouching” and told them to “watch out”.
On the debt ceiling, White House and congressional Republican negotiators will meet again on Tuesday to resolve a impasse over raising the $31.4 trillion debt ceiling, with the nation facing the risk of default in as little as nine days.
Also coming onto the radar is the latest U.S. inventory data, which analysts expect to show a small rise in crude stocks. The first of the week’s two reports, from the American Petroleum Institute, is out at 2030 GMT.