Bloomberg News

WTI Crude Advances as Impact of U.S. Shutdown Seen Limited

October 08, 2013

West Texas Intermediate crude advanced from a four-day low amid speculation that the partial U.S. government shutdown will be resolved without curbing fuel demand in the world’s largest oil user.

Futures gained as much as 0.9 percent. U.S. lawmakers began taking the first tentative steps toward a path to raising the government’s debt limit even as the rhetoric between President Barack Obama and Republican leaders grew more divisive. U.S. crude inventories probably rose a third week, adding 1.6 million barrels, according to a Bloomberg News survey before a government report tomorrow.

“Looking at the actual effects, it’s very limited” for the oil market, Hans van Cleef, an energy economist at ABN Amro Bank NV in Amsterdam, said of the halt in some U.S. public services. “If it takes longer, it could have some effect as closed offices don’t need heating, and if it hurts the economy that will have a demand effect. But that will take several weeks.”

WTI for November delivery rose as much as 91 cents to $103.94 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $103.49 at 1:42 p.m. London time. The contract slipped 81 cents to $103.03 yesterday, the lowest settlement since Oct. 1. The volume of all futures traded was about 30 percent below the 100-day average.

Brent for November settlement rose 54 cents to $110.22 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $6.70 to WTI, compared with $6.65 yesterday.

Dated Brent

Daily exports of North Sea Brent, Forties, Oseberg and Ekofisk crudes, which make up the Dated Brent benchmark, will jump in November to the most in 21 months, loading programs obtained by Bloomberg News show.

Shipments will average 980,000 barrels a day, up 10 percent from a revised 890,323 barrels in October, according to the plans. Dated Brent is used to price more than half of the world’s crude.

U.S. gasoline supplies probably rose by 1 million barrels last week, according to the median estimate of nine analysts in the Bloomberg survey before figures from the Energy Information Administration. Distillate inventories, a category that includes heating oil and diesel, are projected to decrease by 1.4 million, the survey shows.

Shuttered Government

The industry-funded American Petroleum Institute in Washington is scheduled to release separate inventory data today. The API collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey.

Many U.S. government services have been shuttered for a week after a budget impasse, and the country is nine days away from running out of borrowing authority. Republicans are insisting on changing the 2010 Affordable Care Act, while Obama refuses to engage in discussions about policy conditions tied to opening the government or raising the debt limit.

Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the $16.7 trillion debt ceiling, probably for a year unless two-thirds of both chambers of Congress disapprove. If all Senate Democrats along with six Republicans vote for giving Obama authority, they could send a debt-limit increase without policy conditions to the Republican-controlled House with only a few days to spare before U.S. borrowing authority lapses Oct. 17.

The U.S., the world’s largest user of crude, will account for 21 percent of global oil consumption this year, according to the International Energy Agency.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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