| 9 December 2023, Saturday |

Oil prices dip with all eyes on US debt talks

Oil prices dipped on Thursday as traders warily watched for signs of progress on talks to raise the US debt ceiling, after surging in the previous session on optimism over US fuel demand, Reuters reported.

Brent crude futures slipped 76 cents, or 1%, to $76.20 a barrel by 1333 GMT. US West Texas Intermediate crude was down 66 cents, or 0.9%, at $72.17 a barrel.

A sharp plunge in US gasoline inventories due to demand surging to the highest levels since 2021, and optimism surrounding negotiations over the US debt ceiling, helped the main crude benchmarks settle more than $2 higher on Wednesday.

European equities were up and the US dollar hit a new seven-week peak on Thursday, making oil more expensive for holders of other currencies.

President Joe Biden and top US congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal to raise the federal government’s $31.4 trillion debt ceiling and avoid an economically catastrophic default.

A debt agreement needs to be reached before the government runs out of money to pay its bills, which could be as soon as June 1.

Also weighing on prices was the increased possibility of another interest rate hike by the US Federal Reserve, which closely watches the number of Americans filing new claims for jobs benefits. Data on Thursday showed they fell more than expected last week, suggesting the labor market remains tight.

Traders are pricing in around a 20% chance the Fed will raise rates at its June meeting, whereas a month ago, traders were pricing in around a 20% chance of a cut.

The strength of April US economic data, in addition to optimism about the debt ceiling negotiations and the health of regional banking stocks overnight have strengthened market expectations of a further hike, ANZ Research said in a note on Thursday.

  • Asharq Al-Awsat