As the budget impasse continues, the price of oil dropped below $102 a barrel Wednesday and benchmark oil for November delivery fell 44 cents to $101.60 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange or NYME. Similarly, the contract fell 29 cents to close at $102.04 a barrel in New York.
Drop in crude oil prices led to a drop in the prices of several other commodities and the S&P GSCI gauge of 24 commodities slid 0.3 percent to 627.91 at 8:02 a.m. in London. Whereas wholesale gasoline fell 1.6 cents to $2.5948 per gallon, natural gas rose 1.6 cents to $3.625 per 1,000 cubic feet in energy futures trading on the Nymex.
A similar pattern was observed in heating oil prices which slid to $2.9505 per gallon. West Texas Intermediate or WTI oil futures lost 0.5 percent to $101.49 a barrel and Standard & Poor’s 500 Index (SPA) futures were 0.2 percent lower.
According to market analysts, relatively weak oil demand in the U.S. could weaken further due to the budget impasse, particularly if it continues for more than two weeks. In consequence to the budget impasse, the workers have been furloughed which will definitely have a lot of impact on oil prices as these depend a lot on U.S. consumption and 800,000 workers not being paid, short-term demand is likely to be less.
Reportedly, whereas WTI oil fell for a fourth day in New York, Brent crude in London lost 0.3 percent to $107.57 a barrel. The trend was visible even in U.S. gasoline wherein contracts slid by 0.6 percent. The Energy Department’s Energy Information
Administration’s weekly report is expected today, investors will be monitoring this before investing.
Interestingly, despite the government shutdown, the EIA says it will continue to operate and bring the data and according to market observers for the week ending Sept. 27, there are 2.4 million barrels in crude oil stocks and a draw of 1.4 million barrels in gasoline stocks. Considering the stockpiles, Brent crude, a benchmark used to price imported crude used by many U.S. refineries, fell 43 cents to $107.51 in London.
A report from the American Petroleum Institute has already shown that inventories advanced 4.55 million barrels. Moreover, when investors are looking for greener pastures, the picture for oil is not good and sliding unexpectedly. It may go down further as fiscal issues in the U.S. continuing on the second day.
To contact the reporter of this story: Jonathan Millet at email@example.com