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Oil prices fell on Tuesday over demand worries in the US due to the debt ceiling crisis, ambiguity about the US Federal Reserve’s (Fed) interest rate policy and recessionary fears.
International benchmark Brent crude traded at $76.58 per barrel at 09.52 a.m. local time (0652GMT), a 0.67% fall from the closing price of $77.10 a barrel in the previous trading session on Friday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $72.37 per barrel, down 0.41% from the previous session’s close of $72.67 per barrel.
Following discussions last week between US President Joe Biden and Speaker of the House of Representatives Kevin McCarthy regarding the debt limit crisis, both announced on Sunday that they would rule out a default, easing market sales pressure.
Meanwhile, as markets wait for the Fed’s next interest rate decision, persistent recessionary fears continue to hold down oil prices.
Analysts predict that US inflation will not slow down at the desired pace amid strong economic activity, raising the possibility of interest rate hikes.
On the supply side, traders are keeping tabs on the production decisions of major producers in the OPEC+ group despite the two largest members’ divergent messages.
Expectations of further production cuts increased after Saudi Energy Minister Abdulaziz bin Salman warned oil traders last week to “watch out.”
However, Russia’s Deputy Prime Minister Alexander Novak hinted that the group’s present production strategy would continue when he declared on Thursday that energy prices were approaching “economically justified” levels.
Earlier in April, some OPEC+ countries decided to cut output by 1.6 million barrels per day (bpd) on top of their existing cuts of 2 million bpd. Russia quickly followed suit, announcing that it would extend the existing 700,000 bpd output cuts until the end of the year.
