# Oil slips as U.S. debt caution offset supply concerns Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-22 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil Prices Slip on U.S. Debt Caution Meta Description: Caution around U.S. debt talks and China's demand recovery concerns weigh on oil prices despite lower supplies from Canada and OPEC+ producers. URL: https://financedigest.com/oil-slips-as-u-s-debt-caution-offset-supply-concernshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-22t012159z1lynxmpej4l018rtroptp4global-oil-1736813987625-compressed.jpg) # Oil slips as U.S. debt caution offset supply concerns By Florence Tan SINGAPORE (Reuters) -Oil prices slipped on Monday as caution around the U.S. debt ceiling [talks and concerns](https://www.financedigest.com/concern-over-us-default-risk-grips-global-markets-as-talks-resume.html "Concern over US default risk grips global markets as talks resume") about demand recovery in China offset support from lower supplies from Canada and OPEC+ producers. Brent crude futures fell 48 cents, or 0.6%, to $75.10 a barrel by 0201 GMT while U.S. West Texas Intermediate (WTI) crude for July delivery, the more [actively traded](https://www.financedigest.com/ethereum-software-upgrade-activated-ether-reverses-losses-trades-up.html "Ethereum software upgrade activated; ether reverses losses, trades up") contract, fell 45 cents, or 0.6%, to $71.24. The June WTI contract, which expires later on Monday, fell 52 cents to $71.03 a barrel. The resumption of U.S. [debt ceiling](https://www.financedigest.com/dollar-gains-against-yen-as-fed-policy-debt-ceiling-in-focus.html "Dollar gains against yen as Fed policy, debt ceiling in focus") negotiations later on Monday will remain a key driver for crude and risk sentiment this week, IG’s Sydney-based analyst Tony Sycamore said. The U.S. is the [world’s biggest oil consumer](https://www.financedigest.com/world-at-rising-risk-of-recession-as-inflation-hits-consumers.html "World at rising risk of recession as inflation hits consumers"). Investors were also concerned that China’s recovery is faltering after weak economic [data reports](https://www.financedigest.com/banks-recover-75-of-defaulted-debt-owed-by-large-corporate-borrowers-finds-new-global-credit-data-report.html "Banks recover 75% of defaulted debt owed by large corporate borrowers, finds new Global Credit Data report") in the past two weeks, he added. If the housing market continues to fall and policymakers fail to respond, the risk of a double-dip China slowdown increases, which spells bad news for [crude oil consumption and demand,”](https://www.financedigest.com/oil-rises-on-strong-crude-demand-despite-china-fears.html "Oil rises on strong crude demand, despite China fears") Sycamore said. [China is the world’s top crude importer](https://www.financedigest.com/oil-falls-1-as-coronavirus-slower-china-imports-hit-demand.html "Oil falls as coronavirus, slower China imports hit demand") and No. 2 [oil consumer](https://www.financedigest.com/increasing-consumer-adoption-to-fuel-demand-for-automotive-gear-oil-market.html "Increasing Consumer Adoption to Fuel Demand for Automotive Gear Oil Market"). Last week, both oil benchmarks gained about 2%, their first [weekly gain](https://www.financedigest.com/dollar-steadies-near-16-week-low-yuan-set-for-biggest-weekly-gain-since-2005.html "Dollar steadies near 16-week low, yuan set for biggest weekly gain since 2005") in five, after wildfires shut in large amounts of crude supply in Alberta, Canada. The impact of voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, is also being felt after going into effect this month, analysts from [Goldman Sachs](https://www.financedigest.com/telefonica-hires-goldman-sachs-to-sell-uk-mobile-masts-stake-el-confidencial-says.html "Telefonica hires Goldman Sachs to sell UK mobile masts stake, El Confidencial says") and JP Morgan said. Total exports of crude and oil products from the group plunged by 1.7 million barrels per day (bpd) by May 16, JP Morgan said, adding that [Russian oil](https://www.financedigest.com/explainer-what-would-be-the-impact-of-russian-oil-sanctions-in-europe.html "Explainer-What would be the impact of Russian oil sanctions in Europe?") exports will likely fall by late May. On Saturday, the Group of Seven (G7) nations pledged at its annual leaders’ meeting to enhance efforts to counter Russia’s evasion of the [price caps on its oil](https://www.financedigest.com/eu-sees-more-work-ahead-to-implement-russian-oil-price-cap.html "EU sees more work ahead to implement Russian oil price cap") and fuel exports “while avoiding spillover effects and maintaining global energy supply”, but did not provide details. Such enhancements are not expected to change the [supply situation for crude and oil](https://www.financedigest.com/russias-sberbank-sues-glencore-for-116-million-over-oil-supplies.html "Russia’s Sberbank sues Glencore for 6 million over oil supplies") products, the International Energy Agency’s (IEA) Executive Director Fatih Birol said, adding that the agency was sticking to its analysis for now. In its latest monthly report, the IEA warned of a [looming shortage](https://www.financedigest.com/budget-cuts-staff-shortages-and-cyber-threats-keep-it-leads-awake-at-night-as-gdpr-looms.html "Budget Cuts, Staff Shortages and Cyber Threats Keep IT Leads Awake at Night as GDPR Looms") in the second half when demand is expected to eclipse supply by almost 2 million bpd. It remains to be seen if the new [curbs](https://www.financedigest.com/russian-covid-cases-hit-record-high-as-eastern-europe-imposes-new-curbs.html "Russian COVID cases hit record high as eastern Europe imposes new curbs") will impact Russian oil production as the Russians have been very effective in finding ways around European and U.S. sanctions and the sanctions have proved difficult to enforce,” Sycamore said. The U.S. oil rig count fell by 11 to 575 in the week to May 19, the biggest weekly drop since September 2021, energy [services firm](https://www.financedigest.com/triggered-by-regulation-why-the-need-to-comply-is-driving-financial-services-firms-to-adopt-data-management-best-practice.html "Triggered by Regulation – Why the Need to Comply is Driving Financial Services Firms to Adopt Data Management Best Practice") Baker Hughes Co said. \[RIG/U\] “A slowdown in U.S. drilling activity is a concern for the [oil market](https://www.financedigest.com/organic-dispersion-to-drive-the-marula-oil-market.html "Organic Dispersion To Drive The Marula Oil Market"), which is expected to see a sizeable deficit over the second half of this year,” ING said. (Reporting by Florence Tan; Editing by Himani Sarkar and Christian Schmollinger) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---