(LONDON) Oil prices were moving without a clear direction on Monday, between uncertainty over the outcome of U.S. debt ceiling talks weighing on crude, and the prospect of a potential oil supply cut. OPEC.
Around 5:20 a.m. EST (11:20 a.m. Paris), a barrel of Brent from the North Sea, for delivery in July, took 0.11% to 75.66 dollars.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery in June, of which it is the last trading day, dropped 0.14% to 71.45 dollars.
“The impasse in the US debt ceiling negotiations is weighing heavily on sentiment among oil traders,” said Ricardo Evangelista, analyst at ActivTrades.
Joe Biden and Kevin McCarthy, the leader of the Republicans in the House of Representatives, must resume discussions on Monday after a weekend of blocking on this file, to try to avoid a dangerous default in payment by the United States.
“Most investors continue to believe in a last-minute deal […] to raise the US debt ceiling,” the analyst continued. But until then, “expect greater volatility in global oil markets, with further price declines likely as the deadline approaches in early June,” he warns.
A tighter market looms, however, and hinges on “OPEC delivering on promised supply cuts,” CBA analysts say.
In early April, some members of the Organization of Petroleum Exporting Countries and their allies (OPEC) announced voluntary production cuts, pushing up crude prices. Prices have since fallen with growing fears of a global recession and weaker demand.
These reductions, which were to be implemented as early as May 2023, concern approximately 1.7 million barrels per day (bpd).
Representatives of the alliance members are due to meet in Vienna in early June to decide on their next production target.
On the natural gas side, the Dutch TTF futures contract, considered the European benchmark, fell slightly to 29.45 euros per megawatt hour (MWh), shortly after reaching 28.90 euros per MWh, a new low since almost two years.
The overall supply in Europe remains “abundant due to high imports of LNG [liquefied natural gas, editor’s note] from other continents”, explain analysts at Energi Danmark.
They note, however, that “supply from Norway will be reduced in the near future due to pipeline maintenance, which may be enough to prevent the market from falling further.”
In the wake of the war in Ukraine, Norway has become the main supplier of natural gas to the European continent.