Oil prices remained stable on Monday as cautious negotiations surrounding the U.S. debt ceiling prolonged, tempering optimism regarding future demand and offsetting the positive impact of reduced supplies from Canada and OPEC+ member nations.
At 1323 GMT, Brent crude futures inched up by 19 cents, equivalent to a 0.3% increase, reaching $75.77 per barrel. Meanwhile, the more actively traded contract, U.S. West Texas Intermediate (WTI) crude for July delivery, saw a gain of 17 cents, representing a 0.2% rise to $71.72.
The June WTI contract, which is due to expire later today, also advanced by 17 cents to $71.72 per barrel.
Debt default negotiations in the United States were scheduled to resume in Washington on Monday. Concerns lingered among market participants due to the potential consequences of a default, including an economic downturn and a subsequent decline in fuel demand.
However, the International Energy Agency (IEA) cautioned about an impending shortage in the second half of the year, predicting a daily deficit of nearly 2 million barrels in its latest monthly report.
Vandana Hari, the founder of oil market analysis provider Vanda Insights, stated, “I anticipate significant market volatility in the coming days and a rebound in crude prices once a deal is reached to raise the debt ceiling.”
Last week, both oil benchmarks experienced a 2% increase, marking their first weekly gain in five weeks. This was driven by the closure of substantial crude supply in Alberta, Canada, due to wildfires.
The impact of voluntary production cuts by OPEC and its allies, known as OPEC+, has also been felt since their implementation this month.
JP Morgan reported a significant decrease in total crude and oil product exports from the OPEC+ group, amounting to 1.7 million barrels per day (bpd) by May 16. The bank also projected a decline in Russian oil exports by late May.
During its annual leaders’ meeting, the Group of Seven (G7) nations pledged to intensify efforts to counter Russia’s circumvention of oil and fuel price caps while safeguarding global energy supply and preventing spillover effects. However, specific details were not disclosed.
The Executive Director of the IEA, Fatih Birol, told Reuters on the sidelines of the G7 summit that these measures were not expected to significantly impact the supply dynamics of crude oil and oil products.
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