- POSTED: 02 Oct 2013 03:58
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Oil prices retreated again on Tuesday after the partial US government shutdown raised doubts about the strength of US energy demand.
NEW YORK: Oil prices retreated again on Tuesday after the partial US government shutdown raised doubts about the strength of US energy demand.
US benchmark West Texas Intermediate for November delivery fell 29 cents to $102.04 on the New York Mercantile Exchange. WTI earlier in the session traded as low as $101.06 a barrel.
European benchmark Brent crude for delivery in November gave up 43 cents to $107.94 a barrel.
Tuesday's decline followed a similar retreat on Monday as the prospect of much of the government closing down, due to a political battle over the budget, raised concerns about the impact that 800,000 people furloughed without pay would have on economic growth.
One impact will be less energy used for commuting.
"The immediate effect is going to be on gasoline demand," said Andy Lebow, senior vice president for energy derivatives at Jefferies Bache.
"You are going to lose a little bit of demand. You don't know for how long."
Most analysts still do not believe the shutdown will be long enough to cause a major hit to the US economy.
"The main consideration in the very, very short-term is that the US economy will not be significantly impacted as long as a resolution is seen in the coming days," said Matt Smith, analyst at Schneider Electric. "That could be a large caveat."
Markets on Wednesday will be watching the weekly report on US oil inventories. Analysts estimate commercial stocks rose 2.1 million barrels for the week ended September 27, according to a survey by Dow Jones Newswires.