Crude Remains Weak As US Government Shutdown Begins

Crude continues to trade below the $102.00 a barrel level as the US government began a partial shutdown on Tuesday for the first time in 17 years due to budget stalemate, threatening to slow the US economy and cripple oil demand.

The US government shutdown will force hundreds of thousands of government employees to stay home without any pay, leading to the closure of most federal offices (and their websites), national parks and museums and will stall medical research projects.

Economists expect the shutdown might cut as much as 1.4% from the US growth. The United States accounted for 21% of global oil consumption in 2012. Now markets turn their focus to the debt ceiling that must be raised by October 17 to avoid a default.

- WTI crude oil futures for November is trading around $101.98 a barrel after falling $0.36

- Brent futures for November settlement is trading around $107.75 a barrel after falling $0.62

Crude also fell as the Energy Information Administration (EIA) report tomorrow may show US crude stockpiles probably rose for a second week. The EIA said it has enough resources to operate approximately through October 11. The American Petroleum Institute will release a separate inventory data today.

Oil prices have come under pressure in the past month as supply has improved from Libya and Iraq, while tensions over Syria and Iran eased. Signs of improving relations between the United States and Iran also weighed on oil prices.

Darkening the outlook for oil demand this week was China’s weaker-than-expected growth in the manufacturing sector in September which added to concerns that recovery in the world's second largest economy may be weakening.

- Natural gas is trading at $3.538 per cubic feet after falling 0.62%

- Gasoline is trading at $2.6159 per cubic feet after falling 0.47%

- Heating oil (diesel) is trading at $2.9559 a gallon after falling 0.52%