West Texas Intermediate crude fell on Monday after posting the first weekly advance in a month as tropical storm Karen weakened during the weekend and producers began returning personnel to platforms. Ongoing stalemate in budget talks between Republicans and Democrats fueled concern that lawmakers wont reach an agreement to raise the U.S. debt ceiling by October 17, curbing oils demand prospects.
On the New York Mercantile Exchange, WTI crude for delivery in November fell by 0.80% to $103.01 a barrel at 7:00 GMT. Prices held in range between days high and low of $103.57 and $103.01 per barrel respectively. Light, sweet crude rose by 0.6% on Friday and settled the week 0.8% higher, the first weekly advance in a month.
Meanwhile on the ICE, Brent oil for delivery in November slipped 0.65% to $108.74 per barrel at 7:03 GMT and shifted in a days range between $109.27 and $108.74. The European benchmark rose by 0.6% on October 4 and settled the week 0.8% higher after losing 3% in the preceding two five-day periods.
Oil prices advanced last week after tropical storm Karen caused an evacuation at oil platforms in the Gulf of Mexico which resulted in shutting as much as 2/3 of crude output in the Gulf. According to the U.S. Bureau of Safety and Environmental Enforcement, the evacuation caused losses of 866 000 barrels of crude and 1.8 billion cubic feet of natural gas, or 48%, per day. Producers however began returning personnel to their workplaces after the National Hurricane Center downgraded Karen to a tropical depression on Saturday.
Victor Shum, a vice president at IHS Energy Insight in Singapore, said for Bloomberg: “The threat from the storm has dissipated. The focus has really shifted back to the stalemate in the U.S. between the Democrats and Republicans over the budget.”
Meanwhile, market sentiment remained damped as lawmakers failed to break through the deadlock in budget talks and the U.S. government shutdown entered a second week. This fueled concern that Republicans and Democrats will most likely fail to reach an easy agreement on raising the countrys debt ceiling by October 17 which would result in a default. Republican House Speaker John Boehner pledged on Sunday not to raise the nations borrowing limit without a “serious conversation” about what is driving debt. Boehner however said he doesnt intend to let the government default, something which he told his fellow members behind closed doors, even if it involves using Democratic votes.
Yusuke Seta, a commodity sales manager at Newedge in Tokyo, said for CNBC: “There are no bullish or bearish factors to drive the market in either direction until we hear significant news out of the United States. Most oil traders are lost in the market. They are just waiting to see how the oil market will react.”
Oil was underpinned as a weaker dollar supported dollar-denominated commodities. The U.S. dollar index, which measures the greenbacks performance against a basket of six major peers, traded at 80.13 at 6:53 GMT, down 0.14% on the day. The December contract held in range between days high of 80.19 and low at 80.08. The U.S. currency gauge rose by 0.5% on Friday but settled the week 0.15% lower after losing 1.6% in the preceding two five-day periods. Dollar-priced raw materials are supported by a weakening of the greenback as it makes them cheaper for foreign currency holders and boosts their appeal as an alternative investment.