IV:Crude oil drops 1% as storm fears ease, U.S. shutdown drags on
Investing.com - Crude oil futures kicked the week off with heavy losses on Monday, as concerns over a disruption to supplies from the U.S. Gulf Coast eased and as the U.S. government shutdown entered its sixth day.
On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD102.81 a barrel during European morning trade, down 1%.
New York-traded oil futures fell by as much as 1.1% earlier in the day to hit a session low of USD102.70 a barrel. The November contract settled 0.51% higher at USD103.84 a barrel on Friday.
Oil futures were likely to find support at USD101.07 a barrel, the low from October 1 and resistance at USD105.09 a barrel, the high from September 23.
The National Hurricane Center downgraded Tropical Storm Karen to a tropical depression late on Saturday as it weakened over the Gulf Coast.
Oil majors BP, Chevron and BHP Billiton were returning staff to offshore platforms after earlier evacuations, while other companies were also working to restore operations. Approximately 60% of oil production had been shut down ahead of the storm.
Energy traders track tropical weather in the event it disrupts production in the Gulf of Mexico, which is home to nearly 20% of U.S. crude output.
Meanwhile, ongoing uncertainty over the U.S. government shutdown and the upcoming debt ceiling debate also weighed.
Republican House Speaker John Boehner said Sunday the House will not support bills to fully reopen the government or increase the U.S. debt ceiling unless Democrats agree to talks about spending cuts.
The comments fuelled fears that the political deadlock in Washington will not be resolved by October 17, the date which the Treasury Department has estimated the U.S. could risk an unprecedented default.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery retreated 0.95% to trade at USD108.44 a barrel, with the spread between the Brent and crude contracts standing at USD5.63 a barrel.
Wall Street investment bank Goldman Sachs raised its average forecast on Brent’s premium over U.S. crude to USD9 in 2014, up from a previous estimate of USD8.50 a barrel, citing increased production in the U.S. Gulf Coast.
