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Crude Oil Prices Decline on Concern over Default

By  +Follow October 15, 2013 9:53AM
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The price of crude dropped Tuesday, with futures contracts for November 13th delivery trading down almost 1.3 percent for West Texas Intermediate and over 1 percent for Brent. The primary culprit appears to be persistent concern over the government shutdown and the possibility of a default on American debt.

Potential Debt Default Drives Down Prices

At the heart of falling crude prices was continued concern over the potential for a government debt default. The potential economic collapse that would follow a debt default would most likely result in decreased demand for crude at home and abroad, making oil a much less attractive investment for some.

"Crude oil prices retreated ... as the US budget issues in Washington weighed on market sentiment and raised persistent concerns about a slowdown in the US oil demand," said Sucden brokers analyst Myrto Sokou on Monday. "The main focus remains on the US debt ceiling and government shutdown as the markets are hoping for a resolution to the issue before Thursday's deadline."

Oil markets kept a close eye on news out of Washington, but Tuesday seemed to indicate that the stalemate wasn’t coming to an end.

Supply Up As Well

The continued drop in prices comes after prices reached a 14-week low last Wednesday when the government reported higher-than-expected inventories of crude, adding the price-pressure of increased supply to the already present potential for decreased demand.

"We seem to be tipping the scales back toward another test of $100 a barrel," said Tradition Energy broker and analyst Gene McGillian on Wednesday.

ETFs Hit as Well

Plunging crude prices hit ETFs hard as well, with the United States Oil Fund ($USO) dropping over 1 percent and the PowerShares DB Oil Fund ($DBO) declining over 0.5 percent. Joining them were several equities ETFs tracking oil producers, with the Market Vectors Oil Services ETF ($OIH) off over 0.5 percent, the iShares Dow Jones US Oil Equipment ETF ($IEZ) dropping almost 0.65 percent, and the SPDR S&P Oil & Gas Equipment & Services ETF ($XES) plunging over 1 percent.

 

[Image Courtesy of Wikimedia Commons]

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for uso
Kevin B. Bantz
24 Oct 14 12:27:02
$USDX bounce or pause $RB_F $CL_F $HO_F $NG_F $ERX $ERY $USO $SCO http://t.co/df2PLcOx5e http://t.co/HgwbtyL9Ir
Stock Forums
24 Oct 14 12:05:21
$ERX 52Wk Low Click Here: http://t.co/FpSfwFsPX6 Also See: $GPRO $XIV $USO $FB ~
Interactive Brokers
24 Oct 14 11:33:34
#IBTI Technical Analysis - Waverly Advisors Summary Stats http://t.co/kJkoEnDkvN $SPY $IWM $FXE $FXY $USO $GLD $TLT $EWH $EWJ
Mike Weaver
24 Oct 14 10:15:13
Indexes and oil travelling in sync still...$SPY hit celing...so did $USO at same time...smell a rollover here possibly...volume very light
Alan Farley
24 Oct 14 10:13:23
Crude oil inside week keeps everyone guessing. $CL $USO
ken wood
24 Oct 14 09:42:57
$CL_F $USO this strat on tos working well for day traders http://t.co/vL7Jo6IQy1
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24 Oct 14 09:40:01
Our Penny Stock Alerts Gained 371% In 2 weeks! Sign Up For Free Text Alerts For Our New Pick: http://t.co/dLDRavoCi4 $USO $EWP $CORN
Matthew Peacock
24 Oct 14 09:24:58
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Matthew Peacock
24 Oct 14 09:24:05
Buy $USO
FMD Capital
24 Oct 14 09:09:36
Cheap oil presents opportunity for retirement portfolios http://t.co/1XWcl3xknV $SPY $XLE $XOM $CVX $USO $FILL $COP $BP
FMD Capital
24 Oct 14 09:07:36
Just Released --> Weekly Investor Insights http://t.co/EHUV3sie8e $SPY $VWO $XLE $VXX $USO $IYR $TLT
Craig Garbers
24 Oct 14 09:07:11
RT @SAlphaTrending: Global Oil Markets: There And Back Again http://t.co/YGnn1958Lu $HAL $OXY $PXD $RSPP $OIL $USO $BNO $SCO
Interactive Brokers
24 Oct 14 09:03:13
#IBTI Technical Analysis - Waverly Advisors Summary Stats http://t.co/Rda2qrabRZ $SPY $IWM $FXE $FXY $USO $GLD $TLT $EWH $EWJ
Seeking Alpha
24 Oct 14 09:00:04
Global Oil Markets: There And Back Again http://t.co/YGnn1958Lu $HAL $OXY $PXD $RSPP $OIL $USO $BNO $SCO
Seeking Alpha
24 Oct 14 08:55:53
Peak What? Drowning In Oil, Again http://t.co/ueoQN0ZtAr $OIL $USO $CRUD
Stock Forums
24 Oct 14 08:55:51
$CYBR Financials Click Here: http://t.co/UIwC7PG7Iq Also See: $EWRS $SKX $ACT $USO ~
Franco Delloni
24 Oct 14 08:40:47
ETF $USO va perdiendo 11,1% en lo que va del mes
John Ryan
24 Oct 14 08:39:05
In $uco at 24.10. Nat gas and oil are going to return. There are larger powers that will not let this slide continue & cut supply. $uso $dbo
Jay Prideaux
24 Oct 14 08:38:30
Back-Rank Checkmate Potential @chessnwine http://t.co/G4nr6VQJpf $USO $SLB ... Crude dowward pressure
Wall Street Watkins
24 Oct 14 08:27:41
RT @momotrader: While the bulls enjoying a green day in $SPX $DJI $QQQ, $IWM is red, $USO is red and $VIX is green. Know what leads. #TeaL…
Tim Thielen, CMT
24 Oct 14 08:26:53
I just exited a $USO trade... http://t.co/IwptxwJVF8... http://t.co/IwptxwJVF8
Stock Forums
24 Oct 14 08:19:13
$CSX EOD Data Click Here: http://t.co/sZ5YTJVPfq Also See: $SLW $JNJ $SPXU $USO ~
momotrader
24 Oct 14 08:14:17
While the bulls enjoying a green day in $SPX $DJI $QQQ, $IWM is red, $USO is red and $VIX is green. Know what leads. #TeaLeaves
Fractal Bear
24 Oct 14 08:14:03
New $USO alerts http://t.co/aKietJJpzk have recently been posted. Check them out now.
Daily Contracts
24 Oct 14 08:14:01
Real-Time feed of company contracts, original agreements and executive updates from United States Oil Fund Lp $USO http://t.co/32O07dBSIa
FXBAlerts
24 Oct 14 08:12:04
Confidently trade $USO Crude http://t.co/YCamaNmT5E
Dave Bergstrom
24 Oct 14 07:57:04
Dallas Nurse cured? Maybe a bid coming into travel stocks and oil. $SPY $USO $AAL $UAL $DAL
DennisM
24 Oct 14 07:55:44
Forgot how high the US Oil Fund had gotten before Bush left $USO $117, now sitting at 30 http://t.co/GsBjlFMZjk
Robert Lesnicki
24 Oct 14 07:45:47
Crude oil is sitting on recent lows. $USO vs $IWM vs $SPY I think we'll find out soon if it matters http://t.co/Q2xEKMAqfr
Vic Kahvedji
24 Oct 14 07:44:01
RT @TheKillir: Spoo's Up, Crude down! #CouldBeASnoopDoggSong $SPY $USO
Interactive Brokers
24 Oct 14 07:40:13
#IBTI Technical Analysis - Waverly Advisors Summary Stats http://t.co/PTTNYjPWM2 $SPY $IWM $FXE $FXY $TLT $USO $GLD $TLT $EWJ $EWH
Dividend Master
24 Oct 14 07:39:55
$UNG made quite a dive towards $19 but longs beat it back . Its $USO that has ugly feel of trap door opens under it as longs blow up
Chess
24 Oct 14 07:38:33
NEW POST: Back-Rank Checkmate Potential http://t.co/hKhN7pEhKa $CL_F $DTO $SCO $USO
James
24 Oct 14 07:38:01
RT @TheKillir: Spoo's Up, Crude down! #CouldBeASnoopDoggSong $SPY $USO
Stevie B
24 Oct 14 07:37:48
$HERO 3rd quarter revenues $221M with a Market Cap $246M #microcap $SPY $USO $RIG $XLE #stocks
Hammer D. Lane
24 Oct 14 07:36:51
RT @TheKillir: Spoo's Up, Crude down! #CouldBeASnoopDoggSong $SPY $USO
Jeff Kilburg
24 Oct 14 07:36:37
Spoo's Up, Crude down! #CouldBeASnoopDoggSong $SPY $USO
Fractal Long
24 Oct 14 07:36:19
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Fractal Assets
24 Oct 14 07:34:21
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Aaron
24 Oct 14 07:26:49
oil on breakdown watch $cl_f $uso $sco http://t.co/95tl6pOGr5
dvk1970
24 Oct 14 07:23:27
Crude breaking 80 would be a bigger problem to the markets than ebola $SPY $USO
Unrelated Nonsense
24 Oct 14 07:09:49
@DividendMaster that would break the level previously established by #SconsenseAlerts & would be unprecedented. $USO cc @SconnieTrader
momotrader
24 Oct 14 07:08:42
$IWM will lead us lower if we're gonna sell off. Also watching $USO for overall sentiment.
Mr Popular
24 Oct 14 07:08:35
Looks like the market just figured out that oil is down again. $USO $SPY $QQQ
Dividend Master
24 Oct 14 07:07:53
$USO wants a '2' on the big handle ...... its coming
Æther Analytics
24 Oct 14 06:54:58
$CL_F $USO Weekly Bullish Harmonic @seeitmarket http://t.co/RlJSTHtYmJ
Nasdaq Alerts
24 Oct 14 06:39:37
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Market Trader Daily
24 Oct 14 06:30:03
Oct 24-2014 Fri Mkt Open $GLD 118.60 $USO 30.81 $UUP 22.77 $JJC 37.05 $MSFT 46.86 $SHPG 193.88 #stocks #EbolaInNYC
Mitchell Warren
24 Oct 14 06:20:44
Oil May Not Be Done Going Down Just Yet http://t.co/VDTPvaV54x via @TraderPlanet $USO $UUP $CL_F
Murk Sadcrowscream
24 Oct 14 06:08:10
RT @TheArmoTrader: WTI Crude oil trades through 80 and we might start seeing some panicked equity longs again. $CL_F $USO $SPY
				
				
By  +Follow October 15, 2013 9:53AM
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