The price of oil fell by more than 1% amid the strengthening of the US dollar, the continuing uncertainty around raising the debt ceiling and weakening the likelihood of further cuts in OPEC+ oil production.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.15% to 104.07.
Oil was also pressured by news that ratings company Fitch put the United States' "AAA" debt ratings on negative watch in a precursor to a possible downgrade should lawmakers fail to raise the amount that the Treasury can borrow before it runs out of money, which could happen as soon as next week. Fitch's actions revived memories of 2011, when S&P downgraded to AA-plus and set off a cascade of other downgrades as well as a stock market sell off.
Meanwhile, Russian Deputy Prime Minister Alexander Novak said that OPEC+ is unlikely to make any changes to the agreement at the June meeting after the recent decision to reduce production.
Saudi Arabia's energy minister said yesterday that short-sellers betting oil prices will fall should "watch out" for pain. These comments were perceived by market participants as a signal of a possible reduction in OPEC+ production at the next meeting (June 4).
Meanwhile, experts warn that the prospects for the oil market are not bright at the moment: macroeconomic factors, such as negotiations on the US national debt ceiling and Fed’s monetary tightening, are putting pressure on prices.