Brent was trading at below $74 per barrel and West Texas Intermediate had slipped below $70 per barrel as fears of a possible U.S. debt default continue to run high while Congress remains locked in negotiations over the debt ceiling, Oil Price reported.

Legislators need to agree on a higher debt ceiling as soon as possible because the state’s coffers will run out by June 1st, according to Treasury Secretary Janet Yellen. This is not the first time Congress is taking its time agreeing to higher debt limits and it is not the first time various officials are sounding the default alarm.

The current debt ceiling of the United States is $31.4 trillion. Democrats and the White House want this raised without any conditions but Republicans insist on some spending cuts in order to agree to the raise.

"With the uneven re-opening in China and concerns that the U.S is facing a growth slowdown at a time when the X-date for the debt ceiling is rapidly approaching, topped off by a rally in the U.S dollar, market sentiment towards crude oil will remain tepid at best," IG analyst Tony Sycamore told Reuters.

“Sentiment in the oil market remains negative with an uncertain demand outlook and concerns over the US debt ceiling,” Warren Patterson, head of commodities strategy for ING Groep, told Bloomberg. “The market will likely be looking out for any potential demand revisions in the IEA’s monthly market report.”

Since the start of the year, oil has lost some 13%, according to Bloomberg, and traders have accumulated the largest short position on the commodity since July 2021.