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Oil prices dropped today with concerns that the US Government shutdown will impact the demand for commodities.

Brent crude slipped by 40 cents to $107.54 a barrel, while US crude was down by 47 cents to settle at $101.57, reported Reuters.

The US Government shutdown for the first time in 17 years after President Barack Obama refused Republican demands to roll back his signature healthcare law.

The shutdown has left hundreds of thousands of federal employees on unpaid leave, which may impact the demand for crude oil in the country that is the largest oil consumer in the world by volume.

The expectation of a build up of US crude inventories, which saw an increase of 2.3 million barrels last week, is also one of the main reasons for the down fall in oil prices.

"The US Government shutdown for the first time in 17 years after President Barack Obama refused Republican demands."

EIA‘s previous weekly data reported that crude stocks in Cushing, Oklahoma – the delivery point for the US oil futures contract – fell for the 12th consecutive week, but the pace of the drawdown slowed.

The prices also decreased when the investors were relieved, after tensions over Syria and Iran eased and improved oil supplies from Libya with the country ramping up its output.

In 2014, China is expected to take over from the US as the world’s biggest oil importer.

The crude imports of China dropped to 5.05 million barrels per day in August 2013, down from July’s record of 6.15 million bpd.


Image: Oil prices drop as the US Government shutdown hurts consumer confidence. Photo courtesy of freedigitalphotos.net.

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