Oil prices rose over 2% on Friday after the U.S. Congress passed a debt ceiling deal that averted a government default in the world’s biggest oil consumer and jobs data fueled hopes for a possible pause in Federal Reserve interest rate hikes.

The focus is now turning to a meeting of OPEC and its allies this weekend.

Brent futures rose $1.85, or 2.5%, to settle at $76.13 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.64, or 2.3%, to settle at $71.74.

The closes were the highest since May 26 for WTI and May 29 for Brent. For the week, both contracts were down about 1%, in their first weekly losses in three weeks.

Open interest in futures contracts rose on Thursday to the highest since July 2021 for Brent and March 2022 for WTI.

The U.S. Senate approved a bipartisan deal to suspend the limit on the government debt ceiling, following approval in the House of Representatives, staving off a default that would have rocked financial markets.

U.S. employment increased more than expected in May, but a moderation in wages could allow the U.S. Federal Reserve to skip a rate hike this month for the first time in more than a year, which could support oil demand.

Oil traders will watch the June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The group in April announced a surprise production cut of 1.16 million barrels per day, but resulting price gains have been erased and crude is trading below pre-cut levels.

OPEC+ is debating an additional oil production cut among possible options, three OPEC+ sources told Reuters on Friday.

“No one wants to be short crude going into a weekend OPEC+ meeting. … Traders should never underestimate what the Saudis will do and leverage during OPEC+ meetings,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

Saudi Arabia is the biggest producer in OPEC.

In the U.S., energy firms this week slashed the number of oil rigs operating by the most since September 2021, reducing the overall count for a fifth week in a row, energy services firm Baker Hughes Co said in a closely followed report.

U.S. drillers have been cutting back on drilling for months due to an 11% drop in U.S. crude prices and a 51% drop in natural gas futures since the start of the year.

In a reminder of the upcoming Atlantic hurricane season, Tropical Storm Arlene formed in the Gulf of Mexico near Florida. It is expected to weaken over the next day or so as it heads south toward Cuba, moving away from U.S. Gulf Coast oil and gas infrastructure.

On the demand side, manufacturing data out of China, the world’s second biggest oil consumer, painted a mixed picture.

China is suffering from early heatwaves, expected to persist through June, putting power grids under strain as consumers in mega-cities like Shanghai and Shenzhen crank up air conditioners.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)