Modelling A.I. in Economics

Oil Prices Soar on Debt Deal, But Rate Hikes Loom

Oil prices rose on Thursday after a deal was reached to raise the US debt ceiling and avert a default. However, concerns about rising interest rates capped gains.

Brent crude futures rose 1.2% to $78.20 a barrel, while US West Texas Intermediate crude was at $74.70 a barrel, up 1.1%.

The deal, which was reached late Wednesday, would raise the debt ceiling by $480 billion and provide funding for the government through December. The deal was passed by the House of Representatives on Thursday morning and is expected to be passed by the Senate later today.

The deal comes after weeks of uncertainty about the US debt ceiling, which had raised concerns about a potential default. A default would have had a negative impact on the global economy, including by disrupting oil markets.

With the deal now in place, investors are expecting oil prices to remain stable in the near term. However, the market will continue to be driven by factors such as the situation in Ukraine and global economic growth.

In addition to the debt ceiling, investors are also watching the Federal Reserve's plans to raise interest rates. The Fed is expected to raise rates by 50 basis points at its meeting next week, which would be the largest increase since 2000.

Rising interest rates could dampen economic growth, which would in turn reduce demand for oil. As a result, oil prices could come under pressure in the coming months.

Overall, oil prices are expected to remain volatile in the near term. The market will continue to be driven by a number of factors, including the US debt ceiling, the situation in Ukraine, and the Federal Reserve's plans to raise interest rates.

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