Oil holds steady as issues remain in US debt-ceiling talks

Singapore — Oil prices were little changed on Thursday as uncertainty over whether the US will avoid a debt default countered the prospect of further Opec+ production cuts.

Brent crude futures eased 1c to $78.35 a barrel by 4.29am GMT. US West Texas Intermediate crude (WTI) fell 11c, or 0.2%, to $74.23.

Some progress had been made but several issues remained unresolved in US debt-ceiling negotiations, House speaker Kevin McCarthy said on 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 on Wednesday at the White House to try to close a deal.

“A cautious lid on the risk environment brought by the US 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 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 Opec+ could consider further output cuts at a meeting on June 4.

Meanwhile, price declines were capped by an unexpected, huge fall in US crude oil inventories in the week to May 19, reported by the Energy Information Administration (EIA) on Wednesday.

US crude inventories fell by 12.5-million barrels to 455.2 million barrels as imports declined. Analysts had expected an 800,000-barrel rise.

Petrol 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.

Reuters