On Friday, oil prices dropped as investors stressed over the possibility of a default on U.S. debt if policymakers are unable to reach an agreement on raising the debt ceiling.
Prices for Brent crude oil futures dropped 28 cents, or 0.8%, to $75.58 a barrel while for West Texas Intermediate crude oil futures for July expiry, prices dropped 25 cents, or 0.3%, to $71.69.
After Republicans in the House of Representatives and President Joe Biden’s administration suspended talks on Friday about expanding the federal government’s $31.4 trillion debt ceiling, oil prices dropped by as much as a dollar.
The Treasury Department has expressed concern that the federal government may be unable to meet its financial commitments by June 1.
Federal Reserve Chair Jerome Powell’s statements that inflation was “far above” the Fed’s target and that no decisions had been taken on the next interest rate move also sent shockwaves through the markets.
Markets in the United States, Treasury rates, and the dollar all dropped after news of the stopped debt ceiling negotiations and Powell’s remarks.
After meeting with bank CEOs on Thursday, U.S. Treasury Secretary Janet Yellen reassured them that the banking system is strong and sound, the Treasury Department stated.
The energy services company Baker Hughes Co said that the number of active oil rigs in the United States dropped by 11 this week, to 575, the largest weekly reduction since September 2021.
According to the U.S. Commodity Futures Trading Commission (CFTC), money managers reduced their net long positions in U.S. crude futures and options in the week ending May 16.
Original source material for this article taken from here