- POSTED: 04 Oct 2013 04:06
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World oil prices fell on Thursday, the third day of a US government shutdown, amid rising concerns that the political budget deadlock will lead to a debt default this month.
NEW YORK: World oil prices fell on Thursday, the third day of a US government shutdown, amid rising concerns that the political budget deadlock will lead to a debt default this month.
New York's main contract, West Texas Intermediate (WTI) for delivery in November, fell 79 cents to close at $103.31 a barrel.
The European benchmark, Brent North Sea crude for November, lost 19 cents at $109.00 a barrel in London trade.
"The crude complex - and most global markets it would seem - remain fixated on the developments regarding the current US government shutdown. So given the lack of progress in negotiations, crude is left to be subdued once more," said Matt Smith of Schneider Electric.
Oil prices headed south a day after WTI had gained $2.06, lifted by news of the near-completion of a key pipeline between Cushing, Oklahoma and the US gulf coast which would alleviate the bottleneck at the Cushing depot.
But prospects for a swift resolution of the budget impasse in the world's largest crude-oil consumer remained dim on Thursday. Democrats and Republicans showed no hint of readiness to approve a budget for 2014 fiscal year, which began on Tuesday.
The budget fight appears to be bleeding into a battle over raising the $16.7 trillion debt limit. A failure to lift it could push the US into its first sovereign default.
The Treasury estimates that it will exhaust its cash reserves around October 17. "In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth," it said in a report on Thursday.
Meanwhile, a tropical storm was bearing down on the US Gulf Coast, a hub of the oil industry. Authorities urged residents to brace for a hit from Tropical Storm Karen, set to become the first named system to strike the United States this year.
Karen was expected to near hurricane strength on Friday and could approach land near Alabama on Saturday, according to the National Hurricane Centre.