Oil prices were little changed on Thursday as uncertainty over whether the United States will avoid a debt default weighed against the prospect of further OPEC+ production cuts.
Brent crude futures eased 1 cent to $78.35 a barrel by 04290 GMT. U.S. West Texas Intermediate crude (WTI) fell 11 cents, or 0.2%, to $74.23.
Some progress had been made but several issues remained unresolved in U.S. debt ceiling negotiations, House Speaker Kevin McCarthy said Thursday, as the deadline ticked closer to raise the federal government’s $31.4 trillion borrowing limit or risk default.
Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy reconvened Wednesday at the White House to try to close a deal.
“A cautious lid on the risk environment brought by the U.S. debt ceiling uncertainty has also put oil prices on some wait-and-see in the Asia session,” said Yeap Jun Rong, market strategist at IG.
“Coupled with further strength in the U.S. dollar, that has kept oil prices on hold for now, while awaiting a further catalyst to follow through with its recent recovery,” Yeap added.
In the previous session, oil prices were supported by a warning from Saudi Arabia’s energy minister that short-sellers betting oil prices will fall should “watch out” for pain.
Some investors took that as a signal that the Organization of Petroleum Exporting Countries and allies including Russia, together called OPEC+, could consider further output cuts at a meeting on June 4.
Meanwhile, price declines were capped by an unexpected, massive fall in U.S. crude oil inventories in the week to May 19, reported by the Energy Information Administration on Wednesday.
U.S. crude inventories fell by 12.5 million barrels to 455.2 million barrels as imports declined. Analysts had expected an 800,000-barrel rise. [EIA/S]
Gasoline inventories dropped by 2.1 million barrels in the week to 216.3 million barrels, the EIA said, while distillate stockpiles fell by 600,000 barrels to 105.7 million barrels.