Oil prices mixed as threat of US debt default looms

AP FILE PHOTO

SINGAPORE – Oil prices were mixed in Asian trade Wednesday with dealers nervously monitoring the crippling budget impasse in Washington as the deadline for raising the debt ceiling approaches.

New York’s main contract, West Texas Intermediate (WTI) for delivery in November, was up 16 cents at $101.37 a barrel in mid-morning trade, while Brent North Sea crude for November eased one cent to $109.95 a barrel.

With just over a day before the US government begins to run short of money to pay its bills, there was no clear sign of a deal in Washington late Tuesday to reopen the federal government and raise the country’s borrowing limit.

If Congress fails to raise the debt ceiling before midnight Wednesday (0400 GMT Thursday) the US Treasury would begin to run out of money to meet all US obligations and slip towards a historic debt default that analysts fear will cause deep damage to the global economy.

Stalled talks in Congress triggered a fall in Wall Street on Tuesday, while rating agency Fitch placed the country’s AAA rating on watch for a possible downgrade.

The “market is showing increasing signs of unease amid another day of stalled progress on debt ceiling talks,” French bank Credit Agricole said in a note.

“Although 17th October is not necessarily the date that the US defaults on its debt, it nevertheless will be the crucial date that investors have in mind,” it added.

“Tension is building up as we approach this deadline, and talks of hope and progress, rather than concrete deals, might not be enough to keep sentiment from deteriorating.”