Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

Oil creeps lower ahead of more cues on OPEC, debt ceiling talks

Published 05/25/2023, 10:25 PM
© Reuters.
- Oil prices retreated in Asian trade on Friday, extending a sharp drop from the prior session as traders awaited more clarity on the OPEC’s plans for future production cuts, while concerns over the U.S. debt ceiling kept markets on edge.

Crude markets suffered steep losses on Thursday, falling nearly 3% and trimming most of their gains this week after Russian Deputy Prime Minister Alexander Novak said he expects no new steps from the Organization of Petroleum Exporting Countries and allies (OPEC+) during a June 4 meeting.

Selling in crude continued even as Novak clarified that the OPEC was still open to more production cuts, following a surprise supply cut in April.

The comments came barely a day after the Saudi Energy Minister warned against shorting oil prices and that speculators would be hurt. 

The dissonance in signals saw bears rush in to pull oil prices off three-week highs, as concerns over slowing economic growth also came to fore after data signaled a recession in Germany.

Brent oil futures fell 0.5% to $75.83 a barrel, while West Texas Intermediate crude futures fell 0.4% to $71.56 a barrel by 21:57 ET (01:57 GMT). Both contracts were set to end the week marginally higher.

Crude prices reversed a bulk of their gains this week as fears of slowing economic growth largely offset signs of tightening U.S. supply and improving fuel demand in the world’s largest oil consumer.

Data on Thursday showed that Germany, Europe’s largest economy, entered a recession in the first quarter as high energy prices dented consumer spending and industrial production. 

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Uncertainty over the U.S. debt ceiling also weighed ahead of a June 1 deadline for a U.S. default, as lawmakers gave no indication that a bipartisan deal was imminent. 

A U.S. debt default is likely to push the economy into recession and have a widespread impact on the global economy. The dollar surged to a two-month high on increased safe haven demand, further pressuring oil prices.

This largely tied into concerns that slowing economic growth will stymie crude demand this year, which has kept oil prices depressed for most of the year. Crude prices are trading down about 6% so far in 2023.

Fears of a new COVID-19 wave in China also weighed on sentiment, amid warnings that cases could peak by late-June. Markets feared more economic disruption in the country as it struggles to recover from three years of strict COVID lockdowns. 

Latest comments

Reuters expert in giving worst news
this is just a trap for bears, they are friends. watch them come out during meeting and cut more than expected
is this website is made only for bad news and create fear among traders?
Yes, coupled with reuters
Yes, it definitely is
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.