Crude oil futures held their ground today, as the US Senate is close to reach a deal to raise the nation’s debt ceiling and provide temporary government funding.
Brent crude dropped by 23 cents to $109.73 a barrel, while US oil was down by nine cents to reach $101.12, reported Reuters.
The US government is close to reach an agreement to extend its borrowing authority until 7 February 2014 and help itself not slip into another financial crisis, said officials, adding that same issues will persist unless a long-term solution is found.
If the bill fails to pass in the Congress by Thursday’s deadline, checks would likely go out on time for a short while for everyone from bondholders to workers who owe unemployment benefits.
Analysts warned that a default on US government debt obligations could quickly follow and potentially freeze up the country’s financial sector.
Besides this, volatility in oil and other markets could be observed over the next few weeks due to much delayed jobs data, amid the US government shutdown.
Traders are also keen on the outcome of the talks between world powers and Iran over disarming the latter’s nuclear weapons.
The West wants Tehran to allay suspicions that it is trying to attain the capacity to make atomic bombs and back up its newly conciliatory language by quitting nuclear activities.
Iraq’s deputy prime minister for energy Hussain Al-Shahristani said that his country will increase output to 3.5 million barrels per day (bpd) by year-end and export up to four million bpd by the end of the first quarter of 2014.
Prices are also under pressure on expectations that US commercial crude oil stocks rose to 2.2m BPD during the week ending 4 October 2013.
The American Petroleum Institute (API) is due to publish its weekly inventory data later today, while the US Energy Information Administration (EIA) would not release its report starting this week due to a government shutdown.
Image: oil prices steadied on a potential US debt deal. Photo: courtesy of freedigitalphotos.net.