UPDATE 10-Oil prices rise as US closes in on debt deal


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      Benchmarks post second week of gains

      Markets debate OPEC+ plans ahead of next week's meeting

      Fed 'pause' on rate hikes in doubt after strong US data

      U.S. oil rigs fell five to 570 this week -data

 (Adds CFTC data)
    By Arathy Somasekhar
       HOUSTON, May 26 (Reuters) - Oil prices ticked up on
Friday as U.S. officials appeared close to striking a
debt-ceiling deal, and as the market weighed conflicting
messages on supply from Russia and Saudi Arabia ahead of the
next OPEC+ policy meeting.
    Brent crude  LCOc1  settled 69 cents, or 0.9%, higher at
$76.95 a barrel. U.S. West Texas Intermediate  CLc1  closed up
84 cents, or 1.2%, at $72.67 a barrel.
    On a weekly basis, both benchmarks posted a second week of
gains with Brent climbing 1.7%, while WTI rose 1.6%.
    Still, markets remained cautious as debt talks may drag on
and there are fresh worries about a Federal Reserve interest
rate hike next month that would curb demand after strong U.S. 
consumer spending data and inflation readings.
    While it is possible negotiators will reach a deal on Friday
to raise the U.S. government's $31.4 trillion debt ceiling,
talks could easily spill over into the weekend, a Biden
administration official said.    
    Benchmarks had settled more than $2 per barrel lower on
Thursday after Russian Deputy Prime Minister Alexander Novak
played down the prospect of further OPEC+ production cuts at its
meeting in Vienna on June 4. 
    Russia was leaning toward leaving oil production volumes
unchanged because Moscow is content with current prices and
output, three sources with knowledge of current Russian thinking
told Reuters.
    That contrasted with earlier hints of possible output cuts
from Saudi Arabian Energy Minister Prince Abdulaziz bin Salman,
de-facto leader of the Organization of Petroleum Exporting
Countries (OPEC), who warned short sellers to "watch out." 
    Bets on falling oil prices have risen.
    "I think we all are on guard here ahead of next week's OPEC
meeting," said John Kilduff, partner at Again Capital.
    Money managers cut their net long U.S. crude futures and
options positions in the week to May 23, the U.S. Commodity
Futures Trading Commission (CFTC) said on Friday.
    Meanwhile, U.S. demand for gasoline is expected to remain
strong with motorist group AAA predicting the May 27-29 Memorial
Day holiday weekend will be the third-busiest for auto travel
since 2000.
    On the supply side, U.S. oil rigs fell five to 570 this
week, according to a report from energy services firm Baker
Hughes Co  BKR.O . In May, the oil count fell by 21 rigs, which
was the biggest monthly drop since June 2020.
    However, slowing economic growth and sticky inflation in
Europe has capped price gains, with Dutch Central Bank chief
Klaas Knot saying the European Central Bank needs at least two
more 25-basis-point interest rate hikes.

 (Reporting by Arathy Somasekhar in Houston
Additional reporting by Shadia Nasralla and Trixie Yap
Editing by Mark Potter and Matthew Lewis)
 ((Shadia.Nasralla@thomsonreuters.com; Reuters Messaging:
Reuters Messaging: shadia.nasralla.reuters.com@reuters.net))

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