Oil falls to US$103 as US debt deadline nears

Source: Agencies | October 8, 2013, Tuesday |

Online Edition

The price of oil fell to US$103 a barrel yesterday as a partial US government shutdown entered a second week and crude production in the Gulf of Mexico got back on track after a storm system passed through.

Benchmark crude for November delivery dropped 81 cents to close at US$103.03 a barrel on the New York Mercantile Exchange.

The US has been forced to curtail government operations after a politically divided Congress failed to approve a short-term funding measure to allow the nation to pay its bills past the end of its fiscal year on Sept. 30. As a result, 800,000 federal workers were furloughed and scores of nonessential services were halted. Prices were under pressure since energy would be needed less in a prolonged halt to government activities.

Now, Congress faces another deadline that could prove highly damaging to the US economy if missed. The United States's debt ceiling, also known as its borrowing limit, must legally be raised before Oct. 17. The US Treasury estimates it will have US$30 billion of cash on hand on that day, but the money will be exhausted quickly — government bills can run as high as US$60 billion on a single day.

That means the government could default on its obligations to service its debt — which could lead to the first-ever default on government debt.

Oil production, meanwhile, was returning to normal in the Gulf of Mexico, where late last week several companies took precautionary measures as Tropical Storm Karen approached. The storm dissipated without causing major damage.

Brent, the benchmark for international crudes, rose 22 cents to US$109.68 on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline gained 2 cents to US$2.63 per gallon.

— Natural gas rose 12 cents to US$3.63 per 1,000 cubic feet.

— Heating oil rose 1 cent to US$3.01 per gallon.

Energy

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Oil falls to US$103 as US debt deadline nears

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