Oil prices under pressure due to excess supply

US government aims to avoid default catastrophe
Oil prices under pressure due to excess supply
Oil prices down

Oil prices fell on Thursday amid concerns about excess supply, after rising about 3% in the previous session.

Brent crude futures fell 24 cents to $76.72 per barrel. US West Texas Intermediate (WTI) crude also dropped 23 cents to $72.60 per barrel.

According to Reuters, both benchmark crudes rose about 3% on Wednesday amid optimism about oil demand and negotiations on the US debt ceiling.

Oil prices are under pressure, including an unexpected jump in US oil inventories last week due to a new draw from the Strategic Petroleum Reserve. Inventories increased by 5 million barrels in the week ending May 12 to 467.6 million barrels, compared to expectations of a decrease of 900,000 barrels in a Reuters poll.

Read more: Debt ceiling, recession uncertainty cast shadow on oil market

Investors are also closely monitoring developments related to negotiations on the US debt ceiling.

Meanwhile, US President Joe Biden and Republican House Speaker Kevin McCarthy confirmed on Wednesday their intention to reach an agreement soon to raise the federal government’s debt ceiling of $31.4 trillion and avoid the government’s default on its obligations, which would have catastrophic consequences.

On Tuesday, the International Energy Agency (IEA) predicted that in the second half of the year, the demand for oil will exceed the supply by two million barrels per day. It also forecasted that China will account for about 60% of the growth in oil demand in 2023.

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