Oil prices fell about 2% to a week-low on Thursday as a political impasse over the US debt ceiling stoked jitters about a recession in the world’s largest oil consumer, while they weighed on l ‘rising jobless claims in the US and weak economic data from China.
Brent crude oil fell $1.43, or 1.9%, to $74.98 a barrel, while US crude oil (WTI) fell $1.69, or 2.3%, to $70.87.
These were the lowest closes for both benchmark contracts since May 4th.
The dollar rose to its highest level since May 1 against a basket of major currencies after recent US jobless claims data bolstered speculation that the Federal Reserve would halt interest rate hikes, but did not generated expectations of interest rate cuts at the end of the year.
A stronger dollar makes oil more expensive in other countries. Higher interest rates could weigh on oil demand, driving up borrowing costs and putting pressure on economic growth.
US Treasury Secretary Janet Yellen has urged Congress to raise the federal debt limit by $31.4 trillion and avoid an unprecedented default that would trigger a global economic crisis.
“Uncertainties around the US debt ceiling, recent banking woes that could lead to a credit crunch across much of the oil industry, and the continued strong possibility of a recession remain…significant headwinds” for oil markets, analysts at energy consulting firm Ritterbusch and Associates said in a statement.
Additionally, China’s new bank lending fell much sharper than expected in April, raising fears that the economy’s post-pandemic recovery is fading.
Source: Terra
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