Oil rises on U.S debt bill progress and potential pause in rate hikes

LONDON  -Oil prices rebounded on Thursday as a potential pause in U.S. interest rate hikes and the passing of a crucial vote on the U.S. debt ceiling bill restored hopes of further demand growth in the world’s biggest oil consumer.

U.S. Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the U.S. House of Representatives passed a bill suspending the government’s debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures rose 31 cents, or 0.4 percent, to $72.91 a barrel by 0810 GMT while U.S. West Texas Intermediate crude (WTI) added 21 cents, or 0.3 percent, to $68.30. Both benchmarks fell on Tuesday and Wednesday.

“Oil markets may have been oversold in the last two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the debt bill’s passage in the House and (the) Fed’s rate hike pause signal.”

But mixed demand indications from China, the world’s biggest oil importer, have weighed on the market, as has industry data showing a rise in U.S. crude inventories.

“The current mood is one of pessimism,” said Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse of late.”

Market sources citing American Petroleum Institute (API) figures on Wednesday said that U.S. crude inventories rose by about 5.2 million barrels last week. Government stocks data is due at 1430 GMT on Thursday.

Also in focus is the June 4 meeting of the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia after mixed signals on whether further production cuts are likely.