Crude futures continued their decline Oct. 3 on the third day after the partial shutdown of the US government, and analysts conveyed their strong concerns.
“Although the economic effects of the ongoing US government shutdown are not huge, it is not helping demand growth,” said Kevin Norrish, analyst with Barclays Capital Inc. “Decline in federal spending due to the shutdown will cause [gross domestic product] to be weaker by 0.1 [percentage point] on a quarterly annualized basis for each week that the government stays shut,” he said.
“In addition, the improved geopolitical stances surrounding Syria and Iran have resulted in a bearish view in the market,” Norrish noted, adding, “There have been liquidations in Brent and WTI managed money positions, yet they remain very elevated and continue to pose downside risks to oil prices.”
The NYMEX November crude contract lost 79¢ on Oct. 3, settling at $103.31/bbl. The December contract dropped 67¢ to $102.97/bbl.
Heating oil for November delivery edged up a little more than 1¢ to a rounded $3/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for November gained about 1.1¢ to a rounded $2.64/gal.
The November natural gas contract fell 4.3¢ to a rounded $3.50/MMbtu on NYMEX. On the US spot market, the gas price at Henry Hub, La., was a rounded $3.57/MMbtu, down 3.2¢.
In London, the November IPE contract for North Sea Brent crude declined by 19¢ to $109/bbl. The October contract for gas oil climbed $4 to $926.50/tonne while the November contract added $3.25 to settle at $924.75/tonne.
The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes rose 71¢ on Oct. 3 to $106.79/bbl.