May 25, 2023 (MLN): Oil prices dropped on Thursday with investors remaining cautious as the debt ceiling has still not been finalized after the talks on Wednesday, and the clock is ticking with only a week left before June 1.
Brent crude fell by 0.48% to $77.78 per barrel.
While West Texas Intermediate crude (WTI) shed 0.41% to $73.81 per barrel.
However, some progress has been made on the debt ceiling, Democratic President Joe Biden and top congressional Republican Kevin McCarthy called the talks productive that were held yesterday.
Yeap Jun Rong, market strategist at IG stated "A cautious lid on the risk environment brought by the U.S. debt ceiling uncertainty has also put oil prices on some wait-and-see in the Asia session," as reported by Reuters.
"Coupled with further strength in the U.S. dollar, that has kept oil prices on hold for now, while awaiting a further catalyst to follow through with its recent recovery," he added.
Oil prices were somewhat supported in the last trading session as the Saudi energy minister warned short-sellers and suggested more OPEC+ production.
According to the latest data released by Energy Information Administration (EIA), U.S. crude oil inventories fell by 12.456 million barrels in the week ending May 19, representing the biggest draw since November 2022.
While gasoline inventories contracted by 2.053m barrels.
However, the downside is capped to an extent due to the gain in oil prices can also be attributed to an increase in U.S. gasoline futures in the previous trading session ahead of the Memorial Day holiday on May 29 which usually signals the beginning of the high summer fuel demand season.