Oil prices declined in early Asian trading on Thursday as concerns about a potential U.S. debt default overshadowed the possibility of additional OPEC+ production cuts.
Brent crude fell by 5 cents, equivalent to a 0.1% decrease, settling at $78.31 per barrel at 0042 GMT. Meanwhile, U.S. West Texas Intermediate crude (WTI) experienced a decline of 16 cents, or 0.2%, reaching $74.18.
House Speaker Kevin McCarthy highlighted that although some progress had been made, several unresolved issues persisted in the U.S. debt ceiling negotiations. The deadline to raise the federal government’s borrowing limit of $31.4 trillion or face default was approaching.
Democratic President Joe Biden and top congressional Republican Kevin McCarthy reconvened at the White House on Wednesday in an effort to finalize a deal.
The news of Britain’s inflation rate falling by less than anticipated last month exerted additional pressure on oil prices. Official data indicated a higher likelihood of interest rate hikes.
In the previous trading session, oil prices received support from Saudi Arabia’s energy minister’s warning to short-sellers who were betting on oil price declines. The statement was interpreted by some investors as a potential indication of further output cuts by OPEC+ during their meeting on June 4.
The unexpected and substantial decrease in U.S. crude oil inventories during the week ending May 19, as reported by the Energy Information Administration on Wednesday, also contributed to the support of oil prices.