As US lawmakers failed to make any progress to end the budget impasse that threatens to hurt investor confidence and curb demand on oil from the world`s biggest oil user, crude failed to find enough momentum to rise, being stuck around the $103.50 levels.
The US government shutdown continues and the October 17 deadline to raise the debt ceiling approaches, yet some relief came from President Obama who said he is willing to negotiate budget issues with Republicans if they agreed to re-open the government and raise the debt limit.
Adding to the downside pressures on oil prices is the US dollar, which advanced after touching an eight months low against major currencies. A weak US currency makes the dollar-denominated commodities, including oil, cheaper for importers.
Losses however may be limited amid supply disruption concerns from the Middle East geopolitical tensions. Political clashes in Egypt and the capture by US forces of a senior al Qaeda figure in Libya raised the risk of supply disruptions from the region.
- WTI crude oil futures for November is trading around $103.37 a barrel after rising $0.08
- Brent futures for November settlement is trading around $110.07 a barrel after falling $0.10
Moreover, the International Monetary Fund (IMF) cut its world growth forecasts for the sixth straight time in less than two years citing sluggish expansion in the developing world. The IMF also warned that possible supply disruptions may push oil prices as high as $150 per barrel next year.
Crude stockpiles rose more than expected last week by 2.8 million barrels as refineries cut output, the American Petroleum Institute (API) said. Stockpiles were expected to increase by 1.5 million barrels. Gasoline stockpiles fell 2.8 million barrels.
Meanwhile, the Energy Information Administration (EIA) report may show that supplies rose by 1.6 million barrels. This report will be released later in the day despite the government shutdown.
- Natural gas is trading at $3.717 per cubic feet after rising 0.03%
- Gasoline is trading at $2.6381 per cubic feet after rising 0.29%
- Heating oil (diesel) is trading at $3.0338 a gallon after rising 0.04%