Oil futures edged lower Thursday as investors kept tabs on debt-ceiling negotiations, a day after crude bounced to its highest finish in more than a week.
Price action
-
West Texas Intermediate crude for June delivery
CL00,
-0.76% CL.1,
-0.76% CLM23,
-0.76%
fell 48 cents, or 0.7%, to $72.35 a barrel on the New York Mercantile Exchange following a gain of 2.8% Wednesday. -
July Brent crude
BRN00,
-0.83% BRNN23,
-0.83% ,
the global benchmark, was off 57 cents or 0.7%, at $76.39 a barrel on ICE Futures Europe. -
Back on Nymex, June gasoline
RBM23,
+0.12%
edged down by nearly 0.1% to $2.568 a gallon, while June heating oil
HOM23,
-0.82%
shed 0.9% to $2.4009 a gallon. -
June natural gas
NGM23,
+6.72%
gained 5.2% to $2.489 per million British thermal units.
Market drivers
Oil traders on Thursday are “exhibiting a more cautious approach, particularly with regards to the outcome of the debt ceiling negotiations,” following gains for oil prices on Wednesday, said Ricardo Evangelista, senior analyst at ActivTrades,
Crude-oil futures had found support Wednesday after upbeat comments by President Joe Biden and House Speaker Kevin McCarthy on talks toward lifting the debt ceiling and averting a potentially catastrophic default by the federal government.
See: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached
Talks have yet to produce a breakthrough, however. “Despite the recent positive vibes from leading figures on both sides, nothing has yet been agreed, with the doom scenario of no deal still hanging over the U.S. and global economies,” said Evangelista, in markets commentary.
The House of Representatives could vote on a debt-ceiling deal as soon as next week, Speaker Kevin McCarthy said on Thursday. The California Republican said he thinks an eventual bill to raise the borrowing limit needs to be on the House floor next week, and that he can “see the path,” according to a Punchbowl News reporter’s tweet.
Need to Know: Debt ceiling is a buy-the-rumor but sell-the-news event, cautions this strategist
Analysts said concerns over supply may be undercutting crude, which was struggling to extend gains as other assets perceived as risky remained on the rise.
“The fact that investors continue to cheer that the two most extensive markets overhangs are easing (debt limit and bank deposit runs) and oil is not bouncing higher in tandem with broader risk sentiment today continues to suggest supply, not demand, is hurting the bullish thesis with the ubiquitous dark fleets moving Russian and Iraqi oil to destinations around the world and keep inventories topped,” said Stephen Innes, managing director of SPI Asset Management, in a note.
Natural-gas futures, meanwhile climbed sharply Thursday after the U.S. Energy Information Administration reported a slightly smaller-than-expected weekly rise in domestic natural-gas supplies.
Inventories of the fuel in storage climbed by 99 billion cubic feet for the week ended May 12, the EIA said. Analysts called for a storage increase of 106 billion cubic feet on average, according to a survey conducted by S&P Global Commodity Insights.
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