Crude Down On US Debt-Ceiling Concerns, Signs Of Lower Supply

Oil markets have been rattled today by the ongoing US debt ceiling impasse with the June 1 deadline approaching. Prices are down another 0.8% during APAC trading and close to intraday lows. WTI is currently around $71.09/bbl and Brent $74.95. The USD index is 0.1% lower.

• Brent reached an intraday low today of $74.88 but moves below $75 haven’t been maintained and the level appears to be providing some support. WTI is finding support at $71. Its low was $71.01, the lowest since last Wednesday.
• President Biden and House Speaker McCarthy are scheduled to meet again on Monday after having had a “productive” phone conversation on Sunday, according to Reuters. There is significant concern in oil markets that there will be a default which will produce a US recession. See Negotiations Closer On How To Solve Impasse, Biden/McCarthy Meet Monday
• China’s oil imports from Russia eased in April to 7.12mn tonnes after posting a record in March of 9.61mn. All major suppliers to China saw a drop in shipments over the month, adding to market demand concerns.
• Reuters is reporting that JP Morgan has estimated that crude and oil product shipments from OPEC+ fell 1.7mbd to mid-May. The G7 announced that it is going to improve enforcement of price caps on Russian oil exports while “maintaining global energy supply”. Also on the supply side, the number of US oil rigs fell to its lowest since September 2021 according to Baker Hughes.
• The focus later on Monday will be the talks between President Biden and House Speaker McCarthy. There is little in terms of data but the Fed’s Bullard speaks on the US economy and monetary policy. Bostic, Barkin and Daly are all scheduled to talk too.