# Oil slumps 5% to five-week low amid US debt default fears Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-03 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil Slumps 5% to Five-Week Low Amid US Debt Default Fears Meta Description: Stay informed with the latest updates on oil prices plummeting to a five-week low due to concerns surrounding US debt default fears. Learn more here. URL: https://financedigest.com/oil-slumps-5-to-five-week-low-amid-us-debt-default-fearshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-02t004942z1lynxmpej4100urtroptp4usa-oil-reserves-1736814076310-compressed.jpg) # Oil slumps 5% to five-week low amid US debt default fears By Scott DiSavino NEW YORK (Reuters) -Oil prices sank about 5% to a five-week low on Tuesday on concerns about the economy as U.S. politicians discuss ways to avoid a debt default and investors prepare for more [rate hikes this week](https://www.financedigest.com/european-stocks-hit-six-week-high-on-hopes-for-rate-hike-slowdown.html "European stocks hit six-week high on hopes for rate hike slowdown"). Brent futures fell $3.99, or 5.0%, to settle at $75.32 a barrel, while West Texas Intermediate crude (WTI) fell $4.00, or 5.3%, to end at $71.66. That was the lowest close for both benchmarks since [March](https://www.financedigest.com/russian-inflation-accelerates-to-7-61-m-m-in-march-highest-since-1999.html "Russian inflation accelerates to 7.61% m/m in March, highest since 1999") 24 and was also their biggest one-day percentage declines since early January. [Oil prices and Wall Street’s](https://www.financedigest.com/wall-street-pushes-stocks-oil-higher-on-promising-data.html "Wall Street pushes stocks, oil higher on promising data") main indexes both fell after U.S. Treasury Secretary Janet Yellen said the government could [run out of money within a month](https://www.financedigest.com/yangtze-tributary-runs-dry-as-china-faces-another-month-of-drought.html "Yangtze tributary runs dry as China faces another month of drought"). The White House said President Joe [Biden would not negotiate over the debt ceiling during his meeting](https://www.financedigest.com/uks-sunak-plans-to-meet-biden-in-g20-summit.html "UK’s Sunak plans to meet Biden in G20 summit") with four top congressional leaders on May 9, but he will discuss starting “a separate budget process. U.S. [job openings](https://www.financedigest.com/dollar-dips-as-job-openings-fall-fed-meeting-in-focus.html "Dollar dips as job openings fall, Fed meeting in focus") fell for a third straight month in March and layoffs increased to the highest level in more than two years, suggesting some softening in the labor market that could aid the Federal Reserve’s fight against inflation. “The U.S. [economy continues to evolve in a manner consistent with a recession](https://www.financedigest.com/imfs-georgieva-sees-darkening-outlook-for-global-economy-rising-recession-risks.html "IMF’s Georgieva sees ‘darkening’ outlook for global economy, rising recession risks") commencing later this year,” analysts at Barclays, a bank, said in a note. The [manufacturing sector](https://www.financedigest.com/expansion-in-manufacturing-sector-has-increased-demand-for-industrial-cooling-system-market.html "Expansion In Manufacturing Sector Has Increased Demand For Industrial Cooling System Market") is contracting, the consumer is struggling, … There are broadening signs of cracks [emerging within the labor market,”](https://www.financedigest.com/tough-times-and-risky-business-which-emerging-market-assets-are-a-bet-worth-taking.html "Tough times and risky business – which emerging market assets are a bet worth taking") Barclays said. Later this week, investors will look for market direction from expected interest rate [hikes by central banks](https://www.financedigest.com/marketmind-rba-shock-hike-starts-huge-week-for-central-banks.html "Marketmind: RBA shock hike starts huge week for central banks") still fighting inflation. More hikes could slow [economic growth](https://www.financedigest.com/economic-growth-risks-jolt-inflation-obsessed-markets.html "Economic growth risks jolt inflation-obsessed markets") and dent energy demand. The U.S. Federal Reserve is [expected to increase](https://www.financedigest.com/polyimide-fibers-market-is-expected-to-increase-at-a-healthy-cagr-of-around-5-over-the-forecast-period-of-2021-2031.html "Polyimide Fibers Market is expected to increase at a healthy CAGR of around 5% over the forecast period of 2021-2031") interest rates by another 25 basis points on Wednesday. The European Central Bank is also expected to raise [rates at its regular policy](https://www.financedigest.com/key-fed-official-sees-rates-liftoff-in-2023-as-policy-debate-heats-up.html "Key Fed official sees rates liftoff in 2023 as policy debate heats up") meeting on Thursday. “The … action of [central banks in their mission to tame](https://www.financedigest.com/central-banks-opt-for-shock-and-awe-to-tame-inflation.html "Central banks opt for shock and awe to tame inflation") elevated consumer and producer prices … all [cast a rather long shadow](https://www.financedigest.com/softbanks-vision-fund-posts-2-billion-profit-share-weakness-casts-shadow.html "SoftBank’s Vision Fund posts billion profit, share weakness casts shadow") of doubt on prospects going forward,” oil broker PVM’s Tamas Varga said. [Concerns about diesel demand](https://www.financedigest.com/oil-rebounds-from-drop-on-china-demand-concerns.html "Oil rebounds from drop on China demand concerns") in recent months, meanwhile, has pressured U.S. heating oil futures to their [lowest level since](https://www.financedigest.com/ukraine-war-energy-crisis-send-german-business-sentiment-to-lowest-level-since-june-2020.html "Ukraine war, energy crisis send German business sentiment to lowest level since June 2020") December 2021. Oil basically has weakening prospects from the world’s two [largest economies](https://www.financedigest.com/bangladesh-moves-up-the-ranks-and-could-become-the-24th-largest-economy-by-2036.html "Bangladesh moves up the ranks and could become the 24th largest economy by 2036"), China and the U.S., and if the macro backdrop deteriorates momentum selling could easily send prices below the $70 level,” said Edward Moya, senior [market analyst](https://www.financedigest.com/coffee-bean-grinders-market-is-set-to-witness-a-cagr-of-8-1-8-9-during-2021-2031-says-fmi-analyst.html "Coffee Bean Grinders Market is set to witness a CAGR of 8.1%- 8.9% during 2021-2031, Says FMI Analyst") at data and analytics firm OANDA. Over the weekend, [data from China](https://www.financedigest.com/byd-set-to-be-chinas-top-selling-car-brand-for-nov-tesla-gains-data.html "BYD set to be China’s top-selling car brand for Nov, Tesla gains -data"), the world’s top crude importer, showed manufacturing activity fell unexpectedly in April. That was the first contraction in the [manufacturing purchasing managers’](https://www.financedigest.com/bowel-management-systems-market-demand-and-competitive-analysis-by-leading-manufacturers.html "Bowel Management Systems Market Demand and Competitive Analysis by Leading Manufacturers") index since December. ## IRAN OIL OUTPUT RISING On the supply side, [Iran’s oil](https://www.financedigest.com/iran-deal-a-wild-card-for-oil-market-strained-by-supply-risks-reuters-poll.html "Iran deal a wild card for oil market strained by supply risks – Reuters poll") production surpassed 3 million barrels per day (bpd), its oil minister said. The OPEC member, which has been under U.S. sanctions since 2018, [pumped 2.4 million](https://www.financedigest.com/global-cryogenic-submerged-motor-pumps-market-to-create-an-absolute-opportunity-of-us-714-4-million-by-2030.html "Global Cryogenic Submerged Motor Pumps Market to Create an Absolute $ Opportunity of US$ 714.4 Million by 2030") bpd on average in 2021. The [market shrugged off news that the Organization](https://www.financedigest.com/the-outboard-engines-market-to-grow-based-on-organic-expansion.html "The Outboard Engines Market To Grow Based On Organic Expansion") of the Petroleum Exporting Countries’ output fell in April, as sanctioned countries Russia and Iran continued to find outlets for their crude. Meanwhile, U.S. crude stockpiles were forecast to have drawn down for a third week in a row for the first time since December, [falling some 1.1 million barrels last week](https://www.financedigest.com/oil-prices-set-for-weekly-fall-on-stockpile-releases.html "Oil prices set for weekly fall on stockpile releases"), according to analysts in a Reuters poll. \[EIA/S\] \[EIA/A\] The [poll was conducted ahead](https://www.financedigest.com/global-stocks-to-grind-higher-lacklustre-year-ahead-reuters-poll.html "Global stocks to grind higher, lacklustre year ahead: Reuters poll") of reports from the American Petroleum Institute, due at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT on Wednesday. (Additional [reporting by Rowena Edwards in London](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps") and Emily Chow in Singapore; Editing by Marguerita Choy and Josie Kao) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---