Investing.com -- Oil prices rose sharply Friday after the U.S. debt ceiling deal passed through Congress, averting a default ahead of the weekend’s meeting of OPEC ministers and their allies at the weekend.
By 09:00 ET (13:00 GMT), U.S. crude futures traded 2.3% higher at $71.69 a barrel, while the Brent contract rose 2.2% to $75.90 a barrel.
The U.S. Senate approved a bill to lift the country’s $31.4 billion debt ceiling late Thursday, the day after the House of Representatives did the same.
The agreement now heads to the White House, with President Joe Biden just having to sign the deal to stave off a sovereign default that would have had severe economic repercussions globally.
“The approval of the debt ceiling deal in the U.S. Congress has helped bolster broader economic sentiment and supported commodity prices.” analysts at ING said, in a note.
Traders are also looking to see what the Federal Reserve decides to do with its monetary policy at its meeting later this month, having signaled the possibility of a pause in rate hikes at its last meeting.
Data from the Labor Department's Bureau of Labor Statistics on Friday showed that the world's largest economy added 339,000 jobs last month, up from the revised 294,000 in April, the best figure since January. Economists had seen the figure at 180,000.
However, the unemployment rate ticked up to 3.7% from 3.4% in April and average hourly earnings grew by only 0.3% after advancing 0.5% in the prior month.
Fed officials will take a close look at these mixed numbers, and should be encouraged by the smaller-than-expected growth in wages as this should translate into less pressure on prices going forward.
The Fed agreeing to a pause would weigh on the U.S. dollar, making oil cheaper for holders of other currencies.
The weekend sees a meeting of the Organization of Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, to decide future oil production levels.
The group of major producers decided to voluntarily cut output levels when they last met in April in order to boost prices, and may feel the need to do something similar given the fall in oil prices toward $70 per barrel this week.
However, Reuters reported Friday that the cartel is unlikely to decide on further oil supply cuts, having pledged further voluntary cuts at the last meeting in April, adding to a 2 million barrels per day reduction agreed last year.
OPEC+ pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices.