Brent Below $109 On US Political Showdown
Benzinga | Oct 04, 2013 10:06AM ET
Brent crude oil fell below $108 heading into the weekend as worries about the government shutdown's effect on US oil demand weighed on prices.
However, a storm in the Gulf of Mexico kept a floor under prices as many anticipated supply interruptions. Brent traded at $108.84 at 6:24 GMT on Friday morning.
Commodity markets suffered as the US government shutdown entered its fourth day. While the current squabble over an emergency spending bill hasn't had dire effects on the US economy just yet, a prolonged shutdown could have a lasting impact on the nation's progress. Many worry that the government's inability to agree at this point could spell trouble for a larger, more important debate over raising the country's debt ceiling.
Democrats and Republicans will need to come to an agreement and raise the US' borrowing limit on October 17, or the nation will face an unprecedented default on sovereign debt.
Also weighing on Brent prices is the easing tension in the Middle East as the US and Iran take steps toward a closer relationship. On Thursday, the US considered the possibility of lifting some of the sanctions keeping Iranian oil from the market if Iran begins some concrete steps to make its nuclear program more transparent. Although the news added strength to oil prices, most don't expect to see the sanctions lifted any time soon as the US is likely to be focused on its own internal issues at the moment.
Brent found some support as Tropical Storm Karen gained strength in the Gulf of Mexico. Reuters reported that energy companies in the area have been shutting down production and evacuating workers as the storm is expected to reach hurricane strength on Friday. Over the weekend, the National Hurricane Center sees Karen reaching the US Gulf Coast between Louisiana and Florida.
By Laura Brodbeck
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