WTI Falls as U.S. Debt Talks Continue; China Imports Jump

West Texas Intermediate fell for a second day as U.S. lawmakers negotiate an accord to end a partial government shutdown and increase debt limit, raising concern a potential default may slow growth and sap fuel demand.

Futures slid as much as 0.9 percent in New York after ending with a loss for the fourth time in five weeks Oct. 11. Senate leaders wrapped up almost four hours of debate without resolution as the government’s borrowing authority is due to lapse in three days. Net crude imports from China, the world’s second-biggest oil consumer, rose to record 25.61 million metric tons last month, customs data released on Oct. 12 show.

“Oil prices are unable to profit for the threat of U.S. insolvency continues to hang over the markets like the sword of Damocles,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.

WTI for November delivery fell as much as 91 cents to $101.11 and was at $101.52 a barrel in electronic trading on the New York Mercantile Exchange as of 1:18 p.m. in London. The contract slipped 1 percent to $102.02 on Oct. 11, ending down 1.8 percent for the week. The volume of all futures traded was about 5.2 percent above the 100-day average.

Brent for November settlement was $1.02 lower at $110.26 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.79 to WTI, narrowing for the first time in six sessions.

U.S. Default

The congressional deadlock over debt ceiling is threatening the U.S. and world economies, International Monetary Fund Managing Director Christine Lagarde said on NBC’s “Meet the Press” program. The U.S. is the world’s largest oil user, accounting for 21 percent of global consumption last year, according to BP Plc’s Statistical Review of World Energy.

Oil traders are losing a key weekly report on supplies because of the U.S. government shutdown, threatening to reduce market volume and boost volatility. The Energy Information Administration ceased operations and furloughed staff, stopping publications such as the 34-year-old Weekly Petroleum Status Report on Wednesdays, which includes crude and gasoline data.

The suspension means the market will turn to commercial reports from organizations such as the American Petroleum Institute, an industry-funded group that gives paying subscribers first access to the information.

Refinery Premiums

The premium for the earliest deliveries of crude from Cushing, Oklahoma, the biggest oil storage hub in the U.S., is declining after averaging a record during the third quarter as refineries shut for maintenance and the nation boosts output.

The gap between front-month WTI and contracts for delivery a year later was $6.90 a barrel Oct. 11, after averaging $11.70 in the third quarter, as concern eased that tanks at Cushing, the delivery point for WTI, would drop to minimum levels and limit the amount of oil available for delivery right away.

China’s net crude imports are equivalent to an average 6.26 million barrels a day, 25 percent more than in August and 2 percent higher than the previous record of 6.13 million barrels a day in July, data compiled by Bloomberg show.

U.K. labor union Unite served a strike notice at Grangemouth, Scotland’s only oil refinery, for Oct. 20 that may halt crude flows from the North Sea Forties Pipeline System.

The facility, jointly owned by Ineos Group Holdings SA and PetroChina Co Ltd., supplies power and steam to BP Plc’s neighboring Kinneil processing plant, which handles oil from the Forties Pipeline System. The FPS network carries 675,000 barrels a day of crude from more than 50 fields, according to the BP website.

Unite offered to provide full safety cover or maintain the North Sea pipeline and fuel terminal operations, according to an e-mailed statement on Oct. 12.

Before it's here, it's on the Bloomberg Terminal.