Oil prices were little changed on Thursday after a two-day decline, including a sharp drop on Wednesday, as the U.S. government’s credit downgrade weighed on sentiment, though concerns around supply tightness provided some support.
Ratings agency Fitch downgraded the long-term foreign currency ratings of the U.S., the world’s biggest oil consumer, reflecting expected fiscal deterioration, political polarisation and the international status of the U.S. dollar.
Despite the broader bearish sentiment, prices are being supported by concerns of tightening supply because of output cuts by major producers that are expected to be kept in place in a meeting on Friday.
Brent crude futures were at $83.24 a barrel, up 4 cents or 0.1%, at 0422 GMT, while U.S. West Texas Intermediate crude was at $79.53 a barrel, up 0.1%. Both benchmarks were trading near their highest since April on Wednesday, but closed down 2% after the ratings downgrade. WTI prices rose nearly 16% in July while Brent gained more than 14%.
“Since oil had a steady rise over the past month, it was ripe for a pullback. The oil market will remain tight over the short-term, but prices could be still vulnerable for a deeper drop,” said Edward Moya, an analyst at OANDA
