Early Thursday morning Asian trade saw a decline in oil prices as concerns over whether the US will escape a financial default outweighed the potential for more production cutbacks from OPEC+.In the Morning session, Brent crude futures had dropped 5 cents, or 0.1%, to $78.31 per barrel. West Texas Intermediate (WTI) crude for the United States dropped 16 cents, or 0.2%, to $74.18.

As the deadline approached to boost the federal government’s $31.4 trillion borrowing limit or face default, House Speaker Kevin McCarthy indicated Thursday that some progress had been made but that a number of concerns remained unresolved. Democratic presidential candidate Joe Biden and leading Republican congressman Kevin McCarthy resumed their talks on Wednesday at the White House in an effort to reach an agreement.

The news that Britain’s stubbornly high inflation rate declined less than anticipated last month, according to official data, increased the likelihood of future interest rate increases and put pressure on oil prices. A warning from Saudi Arabia’s energy minister that short-sellers who predict a decline in oil prices should “watch out” for pain helped to support oil prices in the previous session.

Some investors interpreted that as an indication that the Organisation of Petroleum Exporting Countries (OPEC) and its allies, which includes Russia, may discuss additional output restrictions at a meeting on June 4. The unexpected, significant drop in U.S. crude oil stockpiles in the week ending May 19, which was published by the Energy Information Administration on Wednesday, also helped to underpin the price of oil.

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