Crude oil prices fell by more than 1%, at the end of trading today, Thursday, May 18 (2023), amid fears of an economic recession that might affect demand.
This comes as traders cautiously await signs of progress in talks to raise the US debt ceiling, which pushed the oil market higher in the previous session due to optimism about US demand for fuel.
Crude oil prices today
At the end of the session, benchmark Brent crude futures – for July 2023 delivery – fell 1.4%, to $75.86 a barrel.
West Texas Intermediate crude futures – for June 2023 delivery – also fell by 1.3%, to record a barrel of $71.86, according to information seen by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Wednesday, May 17, with an increase of about 3%, with optimism about the demand for crude and the possibility of reaching an agreement on the US debt ceiling.
US oil stocks
A sharp decline in US gasoline stocks due to demand rising to its highest levels since 2021, and optimism surrounding negotiations over the US debt ceiling, helped the main benchmark, crude, rise by more than two dollars, on Wednesday.
On the other hand, US oil inventories rose by about 5 million barrels in the week ending May 12, to continue the rise for the second week in a row.
Yesterday, Wednesday, President Joe Biden and US Republican Congressman Kevin McCarthy confirmed their intention to reach an agreement soon to raise the federal government’s debt ceiling of $31.4 trillion and avoid a catastrophic economic downturn.
After a months-long standoff, Biden and McCarthy agreed on Tuesday to negotiate directly; A debt agreement must be reached and passed by both houses of Congress before the government runs out of money to pay its bills, which could be as early as June 1.
Oil price analysis
“Investors have been waiting for more evidence that a deal will happen soon,” said OANDA analyst Edward Moya, Reuters reported.
He added, “Crude oil needs a clear signal that the US economy will avoid economic disaster or that China’s recovery is regaining steam.”
Another factor affecting crude oil prices is the increasing possibility of interest rate hikes by the US Federal Reserve.
ANZ Research, in a note on Thursday, said the strength of April economic data in the US, combined with improved optimism over debt ceiling negotiations and the health of regional banking stocks overnight, boosted market expectations for another increase.
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