Oil prices dropped on Thursday as a result of the strong US currency deterring importers of US-indexed crude oil and the US debt ceiling scenario.
International benchmark Brent crude traded at $78.09 per barrel at 09.20 a.m. local time (0620 GMT), a 0.34% fall from the closing price of $78.36 a barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $73.95 per barrel, down 0.52% from the previous session's close of $74.34 per barrel.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, rose 0.17% to 103.972 early Wednesday.
If the value of the US dollar increases, dollar-indexed crude oil becomes more expensive for buyers holding other currencies.
However, ongoing concerns about the debt limit crisis in the US put downward pressure on oil prices. At the beginning of the year, the US hit its debt ceiling, which led to the debt limit crisis.
On May 1, Secretary of the Treasury Janet Yellen warned that temporary measures taken to combat the effects of the crisis could be insufficient.
Rising oil demand limits price decreases
Meanwhile, oil price declines were limited due to data revealing high demand in the US.
Commercial crude oil inventories in the US decreased by 12.5 million barrels to 455.2 million barrels during the week ending May 19, against the American Petroleum Institute's expectation of a drop of 6.7 million barrels.
The fall in oil inventories signals a rise in demand in the world's largest oil consumer, supporting an uptick in prices.
Investor expectations of an increase in oil demand and supply cuts by the OPEC+ group also pushed prices higher. The OPEC+ group decided to cut 1.2 million barrels per day from the beginning of May.
Analysts expect an oil supply deficit in June if OPEC+ production cuts are fully implemented and demand rises over the summer season.