Oil prices mixed amid US concerns

AFP FILE PHOTO

LONDON — Oil prices traded narrowly mixed on Thursday as investors fretted over the economic impact of a protracted US government shutdown.

New York’s main contract, West Texas Intermediate (WTI) for delivery in November, fell 33 cents to $103.77 a barrel.

Brent North Sea crude for November edged up nine cents to stand at $109.28 a barrel nearing midday in London.

“Crude oil prices have been consolidating with Brent trading sideways around $109 a barrel, while WTI oil has posted limited losses,” noted Myrto Sokou, senior research analyst at Sucden brokers.

“Economic conditions in the US remain fairly tentative as the US government shutdown continues to dominate the markets, weighing on sentiment.”

Sokou added that a weak dollar could offer renewed support for oil prices.

WTI had jumped $2.06 in New York trade Wednesday on news of the near-completion of a key US Gulf Coast pipeline that is set to lower transportation costs.

Prices rose on Wednesday also owing to a weaker dollar, making benchmark contracts such as Brent cheaper for holders of rival currencies. Brent closed up $1.25 on Wednesday.

Talks between President Barack Obama and top Republicans on Wednesday failed to break the budget impasse, with both sides accusing the other of refusing to negotiate.

The breakdown ensured that the world’s largest economy headed into a third day of a government spending freeze Thursday, raising fears that the gridlock will continue into the middle of the month and trigger a catastrophic debt default.

Joyce Liu, investment analyst at Phillip Futures in Singapore, said investor gloom over the increasing likelihood of an extended US government shutdown was exacerbated by a lackluster US jobs report.

Payrolls firm ADP said on Wednesday that the US private sector added 166,000 jobs in September, below what analysts had expected and too low meaningfully to reduce the jobless rate.

“The worse-than-expectations increase in ADP employment, together with the furlough of about 800,000 due to the government shutdown, do not paint an optimistic future for the US labor market,” Liu said.

Oil prices were also pressured after the US Department of Energy reported that supplies increased by 5.5 million barrels last week, far higher than expectations of a 2.1 million barrel rise and an indication of weaker demand.