West Texas Intermediate swung between gains and losses near a three-month low before tomorrow’s deadline for U.S. lawmakers to reach a deal on raising the debt limit and avoid a default.
Futures fluctuated in New York after losing 1.2 percent yesterday, the most in almost a week. U.S. Senate leaders will resume talks today after the House of Representatives scrapped a vote on its plan to suspend the debt limit until February. Western diplomats are meeting for a second day in Geneva with Iranian counterparts for talks on the country’s nuclear program. A strike at a refinery in Scotland, which could have led to 45 percent of U.K. crude output being halted, was canceled.
“The U.S. is going to do the right thing, but only after exhausting all the alternatives,” said Guy Wolf, global head of market analytics at Marex Spectron Group in London. “If they technically breach the deadline, as it appears they might, it will lead to some volatility but I don’t see it as a prolonged issue. This is not Greece.”
WTI for November delivery was 32 cents lower at $100.89 a barrel in electronic trading on the New York Mercantile Exchange at 1:14 p.m. London time. The contract declined $1.20 to $101.21 yesterday, the lowest settlement since July 2. The volume of all futures traded was about 21 percent below the 100-day average.
Brent for November settlement, which expires today, lost 46 cents to $109.50 a barrel on the London-based ICE Futures Europe exchange. The more-active December contract fell 23 cents to $109.19. The front-month European benchmark was at a premium of $8.57 to WTI, down from $8.75 yesterday.
The U.S. Energy Department won’t release weekly inventory data this week because of the partial government shutdown. The American Petroleum Institute is scheduled to release its own weekly inventory report later today.
Senate Majority Leader Harry Reid, a Democrat, and Minority Leader Mitch McConnell, a Republican, suspended talks yesterday while the Republican-controlled House was considering its own bill. They must reach a final agreement, get all 100 senators to permit an expedited vote and persuade House Speaker John Boehner to allow a vote that would pass largely with Democratic support.
The deadlock is threatening the U.S. and world economies, International Monetary Fund Managing Director Christine Lagarde said this week. 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.
Iran and world powers may hold another round of negotiations this month, a sign that compromises offered by the Persian Gulf country over its disputed nuclear program are being taken seriously. A new round of talks may take place in two weeks, said a European official attending the meeting, who asked not to be identified because the discussions are private.
Iran told diplomats from the U.S., China, France, Germany, Russia and the U.K. that it’s prepared to take confidence-building measures by the second quarter of next year, Deputy Foreign Minister Abbas Araghchi said to reporters yesterday, without specifying the steps.
The two-day meeting is the first since Iran’s new president, Hassan Rouhani, and his U.S. counterpart Barack Obama spoke by phone last month in the highest-level contact between the countries since the 1979 Islamic Revolution. Rouhani’s overtures have raised expectations of progress in the talks aimed at curbing Iran’s nuclear program.
A strike was called off at Ineos Group Holdings SA’s 210,000 barrel-a-day refinery in Grangemouth, Scotland, according to a statement by labor union Unite. The plant supplies power and steam to BP Plc’s neighboring Kinneil processing plant, which handles oil from the company’s Forties Pipeline System gathered from more than 80 North Sea fields.