Oil fell the most since early May after Russia downplayed the likelihood of another OPEC+ production cut.
The Organization of the Petroleum Exporting Countries and its allies are unlikely to take new steps at their meeting in June, Russian Deputy Prime Minister Alexander Novak said in an interview with Izvestia on Thursday. West Texas Intermediate later settled below $72 a barrel, erasing earlier gains sparked by a warning from Saudi Arabia on Tuesday that short sellers in the oil market should “watch out.”
The Saudi jibe appeared to briefly isolate oil price action from broader market sentiment, which was overcome amid debt ceiling turmoil in Washington. However, a stronger dollar on Thursday added to crude oil’s losses.
Crude is behaving “like a small child that swings from high to low very quickly and often, not reacting to reason but to emotion,” said Rebecca Babin, senior energy trader at CIBC Private Wealth.
Crude oil futures are down about 9% this year, as China’s muted economic recovery and tighter US monetary policy have combined to weigh on prices. Federal Reserve officials are leaning toward holding off on interest rate hikes in June, while signaling they are not yet ready to end their fight against inflation. Citigroup Inc. cast doubt on earlier forecasts of oil demand growth, saying “several signs” suggest it is unlikely to come close.
Meanwhile, in Washington, the showdown over a debt deal with the US has weighed on markets in recent weeks. Fitch Ratings put the country’s AAA credit rating on watch, a sign of growing uneasiness about the country’s ability to avoid a first default, hours after House Speaker Kevin McCarthy said there was still time to get a agreement
Prices:
- WTI for July delivery fell $2.51 to settle at $71.83 a barrel in New York.
- Brent for July settlement was down $2.10 to settle at $76.26.
