MOSCOW (MRC) -- Oil prices dipped as traders warily watched for signs of progress on talks to raise the U.S. debt ceiling, after surging in the previous session on optimism over U.S. fuel demand, said Hydrocarbonprocessing.
Brent crude futures slipped 76 cents, or 1%, to USD76.20 a barrel by 1333 GMT. U.S. West Texas Intermediate crude was down 66 cents, or 0.9%, at USD72.17 a barrel. A sharp plunge in U.S. gasoline inventories due to demand surging to the highest levels since 2021, and optimism surrounding negotiations over the U.S. debt ceiling, helped the main crude benchmarks settle more than USD2 higher.
European equities were up and the U.S. dollar hit a new seven-week peak on Thursday, making oil more expensive for holders of other currencies.
President Joe Biden and top U.S. congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal to raise the federal government's USD31.4-T 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 U.S. 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 U.S. 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.
We remnd, India's oil imports from Russia rose to a fresh record high in April, further reducing the share of Middle Eastern and African grades to their lowest level in at least 22 years. Refiners in India, the world's third-biggest oil importer and consumer, are on a Russian oil-buying binge after some countries shunned purchases from Moscow over its invasion of Ukraine in February last year.