Oil Rises Amid Broader Risk On Sentiment

Oil advanced as traders embraced risky assets amid optimism for the US debt-ceiling talks, largely ignoring a bearish US stockpile report.

Crude settled above $72 a barrel on Wednesday as hopes that a deal to raise the US government’s spending limit is possible drove a broader risk-on sentiment across markets. Capping some of the gains was a bearish report that showed US stockpiles rising more than 5 million barrels last week, the biggest increase since January. 

“Trading action today kind of proves that fundamentals are really in the backseat,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “The dataset was underwhelming — if not outright bearish — but crude is holding up as a risk-on tone shapes the macro trading environment.”

Crude is down about 9.4% this year as China’s slower-than-expected recovery, the Federal Reserve’s aggressive monetary tightening campaign and concerns over the US debt ceiling weigh on the outlook. Still, US retail sales rose in April, suggesting that consumer spending in the world’s biggest economy is holding up in the face of economic headwinds.

Prices:

• WTI for June delivery rose $1.97 to settle at $72.83 a barrel in New York.
• Brent for July settlement gained $2.05 to $76.96 a barrel.