Oil prices fell about two per cent to a one-week low on Thursday as a political standoff over the U.S. debt ceiling stoked recession jitters in the world’s biggest oil consumer, while rising U.S. jobless claims and weak Chinese economic data weighed.
Reuters reports that Brent crude futures fell $1.43, or 1.9%, to settle at $74.98 a barrel, while West Texas Intermediate crude (WTI) fell $1.69, or 2.3%, to settle at $70.87.
Those were the lowest closes for both benchmarks since May 4.
The dollar data strengthened the case for the Federal Reserve to halt interest rate hikes but did not prompt expectations of year-end rate cuts.
A stronger greenback makes oil more expensive in other countries. Higher interest rates can weigh on oil demand by boosting borrowing costs, pressuring economic growth.
U.S. Treasury Secretary Janet Yellen urged Congress to raise the $31.4 trillion federal debt limit and avert an unprecedented default that would trigger a global economic downturn.
“Uncertainties regarding the U.S. debt ceiling, recent banking issues that could prompt a credit crunch across much of the oil industry and continued strong possibility of a recession remain … significant obstacles” for oil markets, analysts at energy consulting firm Ritterbusch and Associates said in a note.Reuters
