- Oil trades lower ahead of U.S. debt ceiling talks
- June ’23 WTI lost 18c this morning to trade around $71.37/Bbl
- Concerns about a severe economic downturn in the U.S. and slower-than-expected growth in China weigh on prices
- Fears of a possible U.S. default, despite its low probability, continue to be one of the most bearish factors
- President Biden and House Speaker McCarthy are scheduled to convene later today to discuss preventing a U.S. default
- Both equities and the dollar are holding steady ahead of the debt ceiling talks
- Furthermore, the net long positions of non-commercial entities like hedge funds are nearing the highest bearish levels since 2011 across all key oil contracts, implying they're braced for a recession
- U.S. oil rigs dropped by 11 last week, recording the most significant monthly decline since 2020, marking another week of reduced U.S. rigs
- The overall count of active US oil and gas rigs has decreased by 35 in the past month
- Additionally, Iraq and Russia have reiterated their dedication to the agreed-upon OPEC+ production cuts, underlining the continued cooperation between the energy sectors of the two countries
- Rising Russian oil exports trigger skepticism on production cut pledge (BBG)
- Despite the Kremlin's pledge to reduce oil production by 0.5 MMBbl/d, a surge in seaborne exports by 0.268 MMBbl/d from February to May raises doubts about their commitment
- Although refinery processing rates fell by 0.372 MMBbl/d in May, persistent high exports suggest that Russia might be utilizing its oil reserves to maintain export levels