Brent Below $111 As Talks Between Iran And The US Commence

Hopes that the US government's budget impasse was nearing an end helped boost oil prices in the early hours of Tuesday. Investors were buying contracts and covering short positions in the hopes that Democrats and Republicans in Washington would end their two week stalemate. Brent crude oil traded at $110.99 at 4:15 GMT on Tuesday morning. Related:

Rumblings from Washington contributed to optimism about the US debt ceiling, with most betting the two sides would reach an agreement before the October 17th deadline. However, with two days to go, some are getting nervous that the US will default on its loans, which would cause massive damage to the US economy and sharply decrease the nation's oil demand.

reported that International Monetary Fund Chief Christine Lagarde has called for an end to the impasse, claiming that the ramifications of a US default would cause a “massive disruption” to the global economy. Talks between Western leaders and Iranian policy makers are set to begin in Geneva on Tuesday. They will be the first of their kind since Iranian President Hassan Rouhani was elected. Rouhani has been working with the US to repair their historically troubled relationship and reach a compromise over the Tehran's disputed nuclear program. Oil prices will hinge largely on the US budget impasse as the government shutdown and uncertainty about the debt ceiling weigh on investors' minds. The US Energy Information Administration will not publish weekly oil inventory data this week because the shutdown has left the organization short of funding. This will be the first time the EIA has been unable to publish its report due to funding issues since 1979.