Oil prices tumbled Tuesday as worries about demand accelerated on concerns that a weekend deal to raise the $31 trillion US debt ceiling will be derailed.

US and international oil prices each dropped to their lowest prices since May 5. West Texas Intermediate crude fell as much as 5% to $69.02 per barrel. Brent crude lost as much as 4.9% when it hit $73.16.

Price declines were later trimmed to around 4.6% each.

The oil market appeared nervous about potential signs of rebellion within the Republican ranks over the debt deal House Majority Leader Kevin McCarthy reached in principle with the White House over the weekend.

The Fiscal Responsibility Act, if passed, would limit US baseline spending for two years and raise the debt ceiling into 2025.

But several Freedom Caucus members were among the GOP lawmakers who have indicated they won’t back the agreement, Politico reported Tuesday.

And CNBC reported that two of nine Republican members on the House Rules Committee have signaled their opposition to bringing the proposal to the House floor for vote on Tuesday.

“Oil prices remain stuck while awaiting the response from Congress on the debt ceiling deal,” Saxo Bank strategists said in a note early Tuesday.

Oil prices were coming off a weekly win supported by a warning from Saudi Arabia’s energy minister that short speculators should “watch out.” Saxo Bank said the warning helped increase net long positions in Brent by the most in two months in the week to May 23.

The Treasury Department on Friday revised its outlook on when the government will run out of cash to pay bills, to June 5 from June 1. OPEC will hold its June meeting just before that deadline, and investors could see the group announce production cuts.

Source: Business Insider