Oil prices fall due to statistics and fears of US insolvency

Oil production in the US. Illustrative photo.

London – Oil prices fell sharply today, falling to a five-week low. Concerns that the US will not be able to repay some of its bonds, weak economic data from China and expectations that the United States and Europe will raise interest rates again this week are to blame.

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Around 18:00 CEST, the price of Brent North Sea crude fell by 4.2 percent to 75.96 dollars per barrel. U.S. WTI crude was down 4.5 percent at the same time, trading around $72.29 a barrel.

U.S. Treasury Secretary Janet Yellen said the U.S. government could run out of money within a month and the government likely won't be able to meet all payment obligations by early June. That prompted President Joe Biden to summon four top congressional officials to the White House next week. US insolvency insurance costs hit new highs.

Oil prices also came under pressure after official data over the weekend showed that manufacturing activity in China unexpectedly fell in April for the first time since December. China is the world's largest oil importer. According to analysts, the unfavorable economic outlook in other parts of the world and the unpredictable actions of central banks in their efforts to slow inflation also have a negative effect on prices.

The US central bank (Fed) is expected to raise interest rates by another quarter on Wednesday. percentage point. The European Central Bank should also raise rates on Thursday. Higher interest rates could slow economic growth and reduce demand for energy.

Oil could be supported by the report on weekly US inventories. According to a survey conducted by the Reuters agency, oil inventories fell by about one million barrels in the past week. For the first time since December, they recorded a decline for the third week in a row.