Oil Prices Retreat on Debt Ceiling Worries

Early Asian trade on Monday saw oil prices fall, extending losses into a third session as investors expected further progress in talks over the U.S. debt ceiling while continuing to focus on potential supply shortages in North America.

By 11:07 AM Bangkok time, Brent oil futures fell to $74.84 per barrel, while West Texas Intermediate crude futures  dropped to $71.00 per barrel. Both contracts saw gains of roughly 2% last week, breaking a streak of four consecutive weekly drops.

Over the past week, oil markets were wobbly as investors worried that U.S. debt might restrict petroleum consumption. Oil prices closed the week marginally higher due to US Strategic Petroleum Reserve purchases.

After a week of failed talks, Democratic and Republican lawmakers will meet again today to raise the budget cap. This comes after Treasury Secretary Janet Yellen issued a deadline warning of a U.S. default around the middle of June.

Also, the early wildfires in Canada’s crude-rich Alberta province bolstered the crude market by threatening supply interruptions. This, together with indicators of rising U.S. gasoline consumption over the summer, might lead to short-term shortages.