Oil retreats amid uncertainty over debt ceiling talks By

-- Oil prices retreated in early Asian trade on Standard Foreign Exchange Official WebsiteMonday, extending losses into a third session as markets awaited more progress in negotiations over the U.S. debt ceiling, while focus also remained on potential supply disruptions in North America.

Democrat and Republican lawmakers are set to resume negotiations over raising the spending limit later on Monday after negotiations failed to result in a deal over the past week. This also comes as Treasury Secretary Janet Yellen warned of a mid-June deadline for a U.S. default.

Fears of a U.S. default had rattled oil markets over the past week as investors fretted that economic disruptions stemming from such a scenario could hurt oil demand. But crude prices still closed the week marginally higher, aided by some buy signals as the U.S. began refilling the Strategic Petroleum Reserve.

fell 0.6% to $75.16 a barrel, while fell 0.5%% to $71.31 a barrel by 21:36 ET (01:36 GMT). Both contracts rose around 2% last week, ending four straight weeks of heavy declines.

Crude was somewhat supported by the prospect of supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province. This, coupled with signs of increasing U.S. gasoline demand during the summer season, could tighten oil supplies in the near-term.

Weakness in the offered some relief to crude prices, following mixed signals on monetary policy from the Federal Reserve. While a slew of officials signaled that the bank will remain hawkish in the coming months, Fed Chair Jerome Powell said on Friday that tightening credit conditions may reduce the need to raise interest rates by a big margin. 

But oil is still on course to end May down nearly 5%- its fifth straight month of losses this year as markets continue to grapple with fears of slowing demand and worsening economic conditions. Oil prices are trading substantially lower for the year, amid growing concerns that a recession in major economies will stymie demand. 

A swathe of weak economic readings from China showed that a post-COVID rebound was slowing down in the world’s largest oil importer, casting doubts over forecasts that China will drive oil demand to record highs this year.

While U.S. fuel demand appeared to be improving, supply still remained bloated following an unexpected build in .

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