Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Oil slides 4% on worries about US debt ceiling, OPEC+ talks

Published 2023/05/30, 03:53
Updated 2023/05/30, 21:31
© Reuters. FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringer
LCO
-
CL
-

By Stephanie Kelly

NEW YORK (Reuters) - Oil prices fell more than 4% on Tuesday on concerns about whether the U.S. Congress will pass the U.S. debt ceiling pact and as mixed messages from major producers clouded the supply outlook ahead of the OPEC+ meeting this weekend.

Brent crude futures settled down $3.53, or 4.6%, at $73.54 a barrel. U.S. West Texas Intermediate crude (WTI) was down $3.21, or 4.4%, from Friday's close, to $69.46 a barrel. There was no settlement on Monday because of a U.S. public holiday.

Some hard-right Republican lawmakers said they might oppose a deal to raise the debt ceiling in the U.S., the world's biggest oil user. Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy remained optimistic the deal would pass.

Biden and McCarthy forged an agreement over the weekend that must pass a divided U.S. Congress before June 5, the day the Treasury Department has said the country will not be able to meet its financial obligations, which could disrupt financial markets. McCarthy on Tuesday urged members of his party to support the deal.

"The big elephant in the room is the continued drama over the debt ceiling," said Phil Flynn, an analyst at Price Futures Group. "Until we get the votes, the market is going to be on edge."

The House Rules Committee is due to consider the 99-page bill at 3 p.m. (1900 GMT) on Tuesday, ahead of votes in the Republican-controlled chamber and the Democratic-led Senate

The debt deadline nearly coincides with the June 4 meeting of OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia. Traders were uncertain about whether the group will increase output cuts as a slump in prices weighs on the market.

Saudi Arabian Energy Minister Abdulaziz bin Salman last week warned short-sellers betting that oil prices will fall to "watch out" in a possible signal that OPEC+ may cut output.

However, comments from Russian oil officials and sources, including Deputy Prime Minister Alexander Novak, indicate the world's third-largest oil producer is leaning toward leaving output unchanged.

© Reuters. FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringer

In April, Saudi Arabia and other members of OPEC+ announced further oil output cuts of around 1.2 million barrels per day (bpd), bringing the total volume of cuts by OPEC+ to 3.66 million bpd, according to Reuters calculations.

Chinese manufacturing and service sector data out later this week will also be scrutinised for cues on the fuel demand recovery in the world's top oil importer.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.