Oil shed most of its gains with sentiment deteriorating fast as the clock ticks on US debt ceiling talks.
West Texas Intermediate slipped below $74 a barrel after hitting the highest price since early May in a late Wednesday turnaround. Saudi Arabia’s warning to short sellers and the biggest reported draw in US crude stockpiles since November continued to lend some support to prices.
“Debt ceiling headlines are contributing to the deterioration in risk appetite, but a surge in Covid-19 infections [in China] are also dampening demand expectations,”said Daniel Ghali, a commodity strategist at TD Securities.
Earlier, crude climbed to an intraday high after government data showed US stockpiles fell by more than 12 million barrels, the biggest draw since November. The Energy Information Administration showed strong draws in both crude and refined production stockpiles.
Despite the recent rally, oil is still down around 6% for the year as traders grapple with China’s lackluster post-Covid economic recovery, interest-rate hikes from the Federal Reserve and the US debt conundrum. Russian exports have also remained robust, despite pledges to cut production in retaliation for Western sanctions.
