During the session on Tuesday, oil prices registered a sharp fall of more than 5 percent, registering a minimum of five weeks. The price of crude oil has been hit by concerns about the economy as Congress discusses ways to avoid a debt default.
Investors are bracing for one more rate hike this week from the Federal Reserve. One more increase from the Fed is also forecast. The Federal Open Market Committee (FOMC) meeting began on May 2, and the decision on the interest rate increases will be announced on May 3.
Although everything indicates that the US central bank will raise interest rates once again, probably by 25 basis points, investors are waiting to see if the Fed will announce a pause in rate hikes in the next few meetings. On the other hand, the Federal Reserve could hint at another hike in June.
US Government Could Run Out of Money Within a Month
Oil prices also fell after US Treasury Secretary Janet Yellen said the government could run out of money in a month. While the Republicans seek to negotiate a solution at the cost of cutting spending, the White House has been clear that it will not negotiate.
The White House has signaled that President Joe Biden would not negotiate on the debt ceiling during his meeting with four top congressional leaders on May 9. However, he will discuss the start of “a separate budgetary process,” reported Reuters.
Brent and West Texas Intermediate Prices Today, May 2
After the market closed this Tuesday, the West Texas Intermediate (WTI) barrel registered a fall of $4.08 dollars or 5.390%, trading at $71.58 dollars. On the other hand, Brent futures fell $4.07, or 5.13%, to close at $75.24 a barrel, according to Bloomberg Energy.
That was the lowest close for both benchmarks since March 24. It also represented the largest one-day percentage drop since early January.