By Shadia Nasralla
LONDON (Reuters) – Oil prices dropped on Thursday as a political standoff over the U.S. debt ceiling triggered recession jitters in the world’s biggest oil consumer, where rising jobless claimed also weighed on sentiment.
Brent crude was down 72 cents, or 0.9%, to $75.69 a barrel by 1341 GMT while U.S. crude futures dipped 75 cents, or 1%, to $71.81. Both contracts remain on track for their first weekly percentage gain in four.
The Bank of England raised its key interest rate on Thursday, seeking to curb the fastest inflation in any major economy.
On Wednesday U.S. data showed a key inflation measure monitored by the Federal Reserve eased somewhat, potentially providing cover for the central bank to pause further increases to rates next month. Higher rates can weigh on oil demand.
The number of Americans filing new claims for jobless benefits jumped last week to the highest level since late 2021, suggesting higher interest rates were starting to weigh.
Government data on Wednesday showed U.S. gasoline and diesel inventories fell last week, reflecting stronger demand for transport fuels, while crude oil stockpiles rose unexpectedly on the back of a national reserves release and lower exports. [EIA/S]
Meanwhile, investors are also awaiting news from talks on raising the U.S. government’s $31.4 trillion debt ceiling, which kicked off on Wednesday, with Republicans continuing to insist on spending cuts.
The standoff sent the cost of insuring exposure to U.S. government debt to record highs as Wall Street grows more concerned about the risk of an unprecedented default. [MKTS/GLOB]
JPMorgan Chase CEO Jamie Dimon said on Thursday the bank was preparing a ‘war room’ on the debt ceiling to discuss the impact on markets of a potential U.S. default.
Oil producer group OPEC on Thursday raised its forecast for Chinese oil demand growth this year but left its global projection steady, citing potential downside risks such as the U.S. debt ceiling.
On the supply front, Iraq has sent an official request to Turkey to resume oil exports through a pipeline to the Turkish port of Ceyhan almost seven weeks after its closure, three sources familiar with the matter told Reuters on Thursday.
If reopened, the pipeline could add 450,000 barrels per day (bpd) to global crude oil flows.
(Reporting by Shadia Nasralla; Additional reporting by Jeslyn Lerh in Singapore; Editing by David Goodman)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.