Investing.com — Crude prices reversed early gains to end lower on Friday as talks to raise the U.S. debt ceiling hit an impasse again. But oil bulls still had some hurrah: the first weekly rise in five from gains between Monday and Wednesday.
President Joe Biden and his main Republican rival in Congress Kevin McCarthy had previously said they were closer than before to a deal to raise the $31.4 trillion U.S. debt ceiling, and that a conclusion could come as early as Sunday to avoid a federal default on payments by June 1.
By Friday though, it was clear that the talks were going nowhere. “White House is not being reasonable,” said a headline citing Republican debt negotiators. Another, which ran on Fortune.com and quoting Republican negotiator Garret Graves, was more affirmative on the standoff. “It’s time to press pause because it’s just not productive,” Graves was quoted as telling reporters.
McCarthy himself said: “We’ve got to get movement from the White House, and we don’t have any movement yet.” He added that he and Biden had not spoken on Friday.
Ed Moya, analyst at online trading platform OANDA, added: “A big risk for debt-limit talks [was] that negotiations were too easy and that could have triggered an early vote.”
Referencing the bailout package negotiations during the 2008-2009 Great Financial Crisis, Moya said: “Wall Street has seen this movie before and we needed to see some tension amongst negotiators, in order for a reasonable deal to be reached.”
New York-traded West Texas Intermediate, or , crude settled down 31 cents, or 0.5%, at $71.55 per barrel. Week-to-date though, WTI was up about 2%. The U.S. crude benchmark fell a cumulative 15% over four prior weeks.
London-traded crude, the global benchmark for oil, settled down 28 cents, or 0.4%, at $75.58. For the week, Brent was also up 2% after four previous weeks of losses totaling 14%.
Both WTI and Brent had rallied by more than $1 earlier on Friday on optimism that the debt ceiling talks were making progress.
“Traders were reluctant to go into the weekend short, on the off chance that an agreement to raise the U.S. government’s debt ceiling is struck over the weekend,” Vandana Hari, founder of oil markets advisory Vanda Insights, said in comments carried by Reuters.
Craig Erlam, another analyst at OANDA, concurred. “[A U.S. debt] default was almost certainly never a realistic possibility in the first place,” Erlam said.
Also boosting oil was a weaker dollar, which makes commodities like crude which are priced in the greenback more affordable to holders of other currencies. The was down for the first time in five sessions even as some speculators held to the belief that the Federal Reserve will raise rates for an 11th straight time when the central bank’s policy makers meet on June 14.
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