ALBAWABA – Oil prices dropped $0.59 and $0.42 on the barrel of Brent and West Texas Intermediate (WTI) crudes on Tuesday, according to Reuters.
Brent crude futures fell to $76.48 on the barrel, after a 0.5 percent rise on Friday, and WTI crude futures dipped to $72.25 on the barrel, the news agency reported.
Concerns over the viability of the United States (US) debt ceiling deal and warnings by Saudi officials on the woes of betting against oil weighed heavily on oil prices, both Reuters and Bloomberg explained.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies (OPEC+) are slated to meet on June 3 to discuss output policy.
However, last week, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman warned speculators to “watch out” and that betting against the oil market is ill-advised.
OPEC+ surprised the market in April with an unexpected round of production cuts.
But since then, according to Bloomberg, traders have been steadily ramping up bearish bets on oil.
Speculators also slashed bets against Europe’s diesel benchmark, which had one of the largest concentrations of short positions across the oil market, Bloomberg reported.
Meanwhile, in the US, President Joe Biden and House of Representatives Speaker Kevin McCarthy both voiced their confidence that the US debt ceiling deal will be passed by June 4.
Nonetheless, the deal must clear a divided Congress soon, before June 5, which is when the Treasury Department said the country will not be able to meet its financial obligations.
In the meantime, Republican lawmakers and officials in the US have been speaking out against the debt ceiling deal.
Failing to pass this deal will result in downgrading the credit rating of the US and will surely disrupt financial markets in the US and worldwide.
