09 October 2013, News Wires – Brent futures slipped below $110 per barrel on Wednesday, after lawmakers in Washington made little progress to end a budget impasse that threatens to curb demand in the world’s biggest oil consumer and hurt investor confidence.
US President Barack Obama said he would be willing to negotiate budget issues with Republicans only if they agree to re-open the government and raise the debt limit. Yet further declines were limited on supply disruption concerns from the Middle East.
Brent oil traded 19 cents lower at $109.97 per barrel early on Wednesday, after settling higher for a third straight session. US oil was 6 cents lower.
“The situation in the US is still uncertain, but I believe it will be resolved in time and don’t see much impact on oil markets,” said Tetsu Emori, commodity fund manager at Astmax Investments in Tokyo. ” should be looking at the fundamentals rather than political issues, and we see that the oil market is still well supported.”
Oil also found support from a weak dollar that continued to hover near an eight-month low against major currencies. A weak US currency makes it cheaper for importers to buy dollar-denominated oil.
Political clashes in Egypt and the capture by US forces of a senior al Qaeda figure in Libya over the weekend raised the risk of supply disruptions in the Middle East and North Africa from the key oil producing regions.
US crude stocks rose more than expected last week as refineries cut output, industry group American Petroleum Institute said.
Crude inventories rose by 2.8 million barrels to 366.5 million barrels, compared with analysts’ expectations for a increase of 1.5 million barrels.
The closely watched US commercial crude inventory data from the Energy Information Administration (EIA) is due later in the day, despite the government shutdown.
In its monthly report, the EIA said that global oil markets would be better supplied in 2014 than previously forecast. The EIA projected oil demand growth next year would be 1.17 million barrels per day, a fall of 20,000 bpd from the September forecast.
The government agency also revised up growth in supply of non-Opec oil by 50,000 bpd to 1.5 million bpd in 2014.
For 2013, the EIA revised its demand growth forecast down by 140,000 bpd to 970,000 bpd. Non-Opec oil supply growth for 2013 was revised down by 60,000 bpd to 1.51 million bpd.