WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Tuesday's session with sharp losses triggered by growing skepticism that the Saudi-led coalition of 23 producers, known at OPEC+, can deliver a sustainable cut to collective oil production this year, opening a pathway for higher crude and product exports out of Russia.
Further weighing on market sentiment, a group of at least 20 Republican lawmakers said this afternoon they will vote against a debt ceiling deal unveiled late Sunday by President Joe Biden and House Speaker Kevin McCarthy. The deal itself neither raises nor freezes the debt limit for U.S. federal government, but simply suspends it until 2025. However, it ends prospects of a U.S. default and would allow the government to keep borrowing money through the 2024 presidential election year.
Amid conservative backlash, Rep. Dan Bishop, R-N.C., became the first lawmaker to call for a "motion to vacate" McCarthy from his leadership role for reaching a deal full of "cosmetic things, artificial things that have been outright lied about and misstated."
The Dow Jones Industrial Average erased earlier gains to finish the session lower as Wall Street assessed the odds for the tentative deal to clear the Congress. The 30-stock index lost 50.42 points or 0.15% to end at 33,042.78 and the S&P 500 eked out a 0.002% gain to close at 4,205.52. The U.S. Dollar Index, meanwhile, ended the session lower at 104.078, down 0.058 against a basket of foreign currencies but failed to support the crude complex in afternoon trading.
West Texas Intermediate July futures, the U.S. crude benchmark, settled the session $3.21 lower at $69.46 barrel (bbl), and international crude benchmark Brent for July delivery shed $3.53 bbl for a $73.54 bbl settlement before the contract's expiration Wednesday afternoon. Next-month Brent August futures settled $3.39 bbl lower at $73.71 bbl. NYMEX RBOB June futures plunged 10.75cts gallon to $2.5959, with the next-month delivery contract expanding its discount against the expiring contract to a 11.67cts gallon. NYMEX ULSD June contract declined $0.0885 to $2.2808 gallon and next-month delivery July futures finished the session at $2.2690 gallon.
Later this week, traders will turn their focus to the OPEC+ Joint Ministerial Monitoring Committee meeting scheduled for Sunday, June 4, amid growing uncertainty over the group's next move on production policy. Saudi Oil Minister Prince Abdulaziz bin Salman appeared to suggest the group might opt for another output cut, warning short sellers against "ouching" for taking on bearish positions. Striking a different tone, Russian Deputy-Prime Minister Alexander Novak later said that the market requires no additional cuts. Arguably, Moscow has made little progress on pledged production cuts, with oil and product exports continuing to flow at the pre-war level.
On April 2, OPEC announced a surprise production cut of 1.157 million bpd effective May 1 until the end of the year, with Saudi Arabia and other Gulf producers shouldering the lion's share of the output curb. The reduction comes on top of 2-million-barrels-per-day (bpd) cut announced in October 2022 that has so far been the largest cut to OPEC+ output since the start of the pandemic.
Liubov Georges can be reached at firstname.lastname@example.org .