Oil steadies as higher inventories balance U.S debt bill progress

Oil steadied 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 were offset by a report of rising inventories 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 fell 17 cents, or 0.23%, to $72.43 a barrel by 1203 GMT while U.S. West Texas Intermediate crude (WTI) slipped by 16 cents, or 0.23%, to $67.93. 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.”

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

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. [EIA/S]

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

Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia will discuss whether or not to cut oil production further.

Four sources from the alliance told Reuters that OPEC+ is unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward $70 a barrel.