WTI plunges over 4% as debt-ceiling concerns and mixed messages from producers weigh

Western Texas Intermediate (WTI), the US crude oil benchmark plummets for the second straight day by more than 4%, spurred by woes about whether the US Congress will pass the US debt-ceiling bill as some Republicans had expressed that they would not pass the pact. That, alongside mixed messages by crude oil producers, exerts downward pressure on WTI. WTI is trading at $69.58 after hitting a daily high of $73.33.

US Congress debates debt ceiling, OPEC+ meeting adds to market uncertainty

News emerged during the weekend that US President Joe Biden and US House Speaker Kevin McCarthy sealed an agreement to suspend the debt ceiling until January 1, 2025, but it{s pending approval by the US Congress. US Treasury Secretary Janet Yellen said that the US government could not pay its debt by June 5.

Aside from this, the Organization of Petroleum Export Countries and its allies (OPEC+) would meet on June 4, one day before the US debt-ceiling deadline. Investors are nervous about the outcome of oil production, as the Saudi Arabian Energy Minister Abdulaziz bin Salman warned short sellers, which are betting that prices will fall.

That increased speculations that crude oil output could be cut, while Russian Deputy Prime Minister Alexander Novak signaled that the world’s third largest producer would keep production unchanged.

On April 6, Saudi Arabia and other OPEC+ members announced 1.2 million barrels cut per day, triggering a jump of 6% in oil prices. Nevertheless, prices stabilized and erased those gains.

WTI traders should be aware of the release of China’s business activity report late this week, alongside Global PMIs, which could give us clues about the pace of growth of the global economy.

WTI Technical Levels