Brent slips below $108 as US begins shutdown
Singapore, October 1, 2013
Brent crude fell below $108 a barrel on Tuesday to trade near a 7-week low on worries a shutdown of the US government may crimp oil demand, while investors also eyed easing tensions in US-Iran nuclear talks.
The US government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.
"The shutdown of the government would result in the decrease in demand for oil in the world's top oil consumer, pressuring prices, as hundreds of thousands of government employees would be forced to stay home without any pay," Teoh Say Hwa, head of investment at Phillips Futures wrote in a note.
Brent crude for November fell 62 cents to $107.75 a barrel by 0433 GMT. US crude was at $102.01, down 32 cents.
Oil prices have come under downward pressure in the past month as supply has improved, with Libya ramping up output while tensions over Syria and Iran eased.
"A lot of bull factors have been removed from the market," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"I can't find any bullish factors for oil."
Technical charts showed that US crude futures may fall to $100 after breaking a support level of $102, Hasegawa said, adding that the next support level for Brent is at $105.85.
In China, weaker-than-expected growth in the manufacturing sector in September added to concerns that a nascent recovery in the world's second largest economy may be foundering.
Signs of a thawing in relations between the United States and Iran also weighed on oil prices.
Obama and new Iranian President Hassan Rouhani spoke by telephone last week in the highest-level contact between the countries in more than three decades, fuelling hopes for a resolution of Iran's decade-old nuclear standoff with the West.
The world's six major powers will meet Iranian officials in Geneva on October 15 and 16 to discuss Iran's nuclear programme.
Investors are also looking ahead to US oil inventories data on Wednesday. The US Energy Information Administration (EIA) said it has enough resources to operate approximately through October 11 in the event of a government shutdown.
US commercial crude oil inventories were forecast to have risen last week, while gasoline stockpiles were seen lower, a preliminary Reuters poll of five analysts showed. - Reuters
More INTERNATIONAL NEWS Stories
- China draws red line on North Korea
- Saudi sentences three to death for 2003 bombing
- First bitcoin machine opens in UK
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects
- Sony to sell Tokyo 'birthplace'
- Obama orders sanctions over Russian moves
- Crimea parliament votes to join Russia
- Arab League to be revamped
- 'Upskirting' is legal: Massachusetts court
- Singapore probes 'unnatural' death of bitcoin trader
- Onus on world powers for Syria war crimes: UN
- US, Russia set for talks on Ukraine crisis
- Brent oil drops below $109
- Services outshine manufacturing, pushing up jobs
- Bitcoin bank shut down after hacker attack
- India to kick off world's biggest poll on April 7
- China signals focus on reforms
- Hundreds ready for bitcoin exchange class action
- Space taxi, Jupiter mission in Obama budget
- Putin: Use of force last resort in Ukraine
- Powers to boost Lebanese military, economy
- Egypt bans Hamas activities in Egypt
- Putin ends army exercise, markets rally
- Russia has violated international law: Obama
- Russian markets hit as Putin tightens grip on Crimea
- Iran nuclear deal 'being implemented as planned'
- Global factory growth stumbles as demand falters
- Obama warns of 'fallout' for Israel if peace effort fails
- Ukraine mobilises after Putin's 'declaration of war'