Brent Under Pressure As Shutdown Continues
Brent crude oil traded steadily on Monday morning as investors kept an eye on Tropical Storm Karen. The commodity traded at $109.14 at 4:30 GMT on Monday with the government shutdown keeping a lid on prices.
Over the weekend, oil and gas companies in the Gulf of Mexico shut down their platforms and evacuated workers in preparation for the storm. The closures boosted oil prices a bit, but analysts don't see a lasting impact from the storm as it began to dissipate on Sunday eventing.
The budget battle in the US mitigated gains as Democrats and Republicans in Congress looked no closer to making a deal. Initially, the shutdown was expected to be short lived, however now many believe the closure will drag on as the two sides attempt to include the fast approaching debt ceiling into the negotiations. Republicans are adamant about including reforms to Obamacare alongside the budget, but Democrats as well as the President are adamant about passing a budget with no strings attached.
The prolonged stalemate has many worried that the two sides will not reach an agreement before the October 17 deadline, which would cause the US to default on its sovereign debt. According to CNBC, analysts are worried that the shutdown could do lasting damage to the US economy.
With so much uncertainty in the US, oil demand prospects have dropped which in turn has sent oil prices tumbling. The dollar has also been on the decline and fell to an eight month low at the end of last week.
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