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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
Langan Stocks
22 Oct 14 16:32:28
$GRCU Current Price Click Here: http://t.co/TgAbgjQ8wc Also See: $SQQQ $USO $ROX $DE ~
ETF Trends
22 Oct 14 16:31:02
After a Swoon, Investors Rush Back to #Oil ETFs http://t.co/rSPtIRuo1c #ETF #energy $USO $DBO $BNO $UCO $DTO $UUP
Tom Lydon
22 Oct 14 16:25:15
After a Swoon, Investors Rush Back to #Oil ETFs http://t.co/SiYf0sn3X1 #ETF #energy $USO $DBO $BNO $UCO $DTO $UUP
ac_eco
22 Oct 14 16:02:59
RT @macroQmicro: via @DividendMaster Saudis want $70 oil because it kills their MidEast enemies as well as fracking in USA -Gundlach $BNO $…
TheOptionDon
22 Oct 14 15:55:06
"@TraderRL23: An important comparison chart I look at through out the day. Crude oil is speaking? $USO $IWM $SPY http://t.co/NUqk0wU1z2"
Robert Lesnicki
22 Oct 14 15:52:47
An important comparison chart I look at through out the day. Crude oil is speaking? $USO $IWM $SPY http://t.co/Z8tfT1fmYA
Jeff Quiggle
22 Oct 14 15:32:19
via @DividendMaster Saudis want $70 oil because it kills their MidEast enemies as well as fracking in USA -Gundlach $BNO $USO $XOP
Jeff Quiggle
22 Oct 14 15:25:11
$MACRO > $TLT $GLD $QQQ $IWM $FXI $JNK $SPY $EEM $FEZ $USO Yesterday > $TLT $GLD $JNK $FXI $IWM $QQQ $SPY $EEM $FEZ $USO
NQ Fractalerts
22 Oct 14 15:08:17
New $USO alerts have recently been posted. Check them out now. http://t.co/jsGDYQyaHU
Michael Davey
22 Oct 14 15:03:57
"@Spyder_Crusher: Blog post -- Market Indices Reverse, Oil Still Sticky -- $SPY $IWM $QQQ $USO $CL_F http://t.co/SYwNuRKx59"
Rotten Al
22 Oct 14 14:50:51
Never heard so much bellyaching about oil going lower. LET IT FALL. Long term it's good for the economy. $USO $SPY
EFT_Fractalerts
22 Oct 14 14:33:15
Confidently trade $USO Crude http://t.co/RtWeNQwGns
charts not opinions
22 Oct 14 14:30:11
@CMIDavid @BKBrianKelly nobody taking about it but 75% chance repubs win in November,they very $uso $xle export and $kol friendly
Tweed
22 Oct 14 14:09:28
RT @361Capital: Thorns in the Market Today: $IWM $USO $XLE $FEZ $BA $BIIB $NTRS $DFS $VMW $ECA $TUP $XRX http://t.co/5RJ7Gz4onC
361 Capital
22 Oct 14 14:08:14
Thorns in the Market Today: $IWM $USO $XLE $FEZ $BA $BIIB $NTRS $DFS $VMW $ECA $TUP $XRX http://t.co/5RJ7Gz4onC
Stockaholics
22 Oct 14 13:55:03
Our Penny Stock Picks Gained 371% In 2 Weeks! Get Our Next Pick Early: http://t.co/z2noBUWrEP $USO $EWP $CORN
Mike Mustafoglu
22 Oct 14 13:45:46
Oil resumes slide, falling $2 after second big U.S. stock build http://t.co/RcQAIzbTci via @YahooFinance $USO
Greg Harmon, CMT
22 Oct 14 13:33:03
$USO $CL_F Dead Cat Bounce, back at lows, 77 support, resistance 81/84 http://t.co/uZRTCAU6eC
DWDyck
22 Oct 14 13:22:58
@canuck2usa yep, and $MS & $DB significant turn down today too; $USO & transports ($IYT) leading down
Shaun
22 Oct 14 12:59:39
Right on time :-) short ur oil stocks. Trend looks ready for more. 80$ break hope you caught tweet few weeks back. Killing it on $USO $CL_F
Fractal Index
22 Oct 14 12:53:11
What is the $USO going to do next? Get real time alerts and analysis at http://t.co/szLYZo688c
Serge Berger
22 Oct 14 12:46:30
Lots of weight being pushed on that lower end of the multi-year range on the $USO ... http://t.co/t4F8Hzxhfp
Becky Hiu
22 Oct 14 12:35:17
So, $XLE finally following the crude weakness. $USO - seeing weakness in oil stocks today. http://t.co/wOvsMW7tQp
Norman Mitis
22 Oct 14 12:25:32
$USO (Oil ETF) Weekly Chart – Flush!!! http://t.co/MTjzVgV9UF
♫♪ Soul Girl ♪♫
22 Oct 14 12:13:08
RT @chessNwine: NEW POST: EleVader Down for Crude to the Dark Side http://t.co/yuQzP9xKA5 $CL_F $SPY $USO
Becky Hiu
22 Oct 14 12:07:31
"@venkysrinivasan: And $USO bear flagging. Hmm @BeckyHiu no pos, no bias. :-)"
Chess
22 Oct 14 12:06:17
NEW POST: EleVader Down for Crude to the Dark Side http://t.co/yuQzP9xKA5 $CL_F $SPY $USO
Perfor Mance
22 Oct 14 12:06:14
Option Millionaires: nlightn: $USO,...Crude oil testing $80 amid strong inventory build http://t.co/udw8Mmaj8v
Jack Damn
22 Oct 14 12:05:33
Crude Oil (WTI) back down below 81 to 80.50-ish. Swing low take out 79.85. Potential S/T rez 84. $USO http://t.co/VUBxR3N4qF
strader55
22 Oct 14 12:04:31
nlightn: $USO,...Crude oil testing $80 amid strong inventory build http://t.co/aaKFxF599D
Jon
22 Oct 14 11:57:21
endgame for Russia or just $USO double bottom - altho prob. too close together to count as one... #USAUSAUSA #WINNING
Interactive Brokers
22 Oct 14 11:47:26
#IBTI Technical Analysis - Waverly Advisors Summary Stats http://t.co/KhfUwctCMp $SPY $IWM $FXE $FXY $USO $GLD $EWJ $EWH $TLT
MarketCurrents
22 Oct 14 11:45:02
Crude oil testing $80 amid strong inventory build http://t.co/EdDUPyvX7P $USO $UGA $UNH $OIL
Matthew Peacock
22 Oct 14 11:43:45
RT @TalkMarkets: Crude Has Likely Hit Rock Bottom $USO http://t.co/JLvF8mUQ3P
Matthew Peacock
22 Oct 14 11:42:18
RT @SeekingAlpha: 3 Reason To Buy The Bottom In Crude http://t.co/QoSl7Ffdhm $USO $OIL $UCO $SCO $BNO $DTO $DBO $CRUD $USL $UWTI $DNO $DWTI…
Matthew Peacock
22 Oct 14 11:42:06
RT @SeekingAlpha: 8 Major Reasons Why The Current Low Oil Price Is Not Here To Stay http://t.co/BSBj1vSOtA $BNO $DBO $OIL $UCO $USO
woltz
22 Oct 14 11:39:33
Would not be surprised to see Oil gap down overnight pulling the rest of the market with it $USO
Financial Tailor
22 Oct 14 11:38:32
Bulls, oil is trying to get your attention. $USO http://t.co/egZESciHxI
Anthony Sotirhos
22 Oct 14 11:35:19
RT @DividendMaster: new 28mo low on $USO . All he muppets who rushed into energy last few days getting PRECISELY what they deserve
Seaside Trader
22 Oct 14 11:32:00
$CL_F Daily - Sell into pit close after tagging 8 EMA again - http://t.co/oo1BX9Hgqu #oil $USO @CMEGroup http://t.co/OtPvXpK24g
Volatility Implied
22 Oct 14 11:31:25
$USO $CL_F volume!!!!!!
Dividend Master
22 Oct 14 11:30:57
new 28mo low on $USO . All he muppets who rushed into energy last few days getting PRECISELY what they deserve
Eternity101
22 Oct 14 11:27:26
RT @jmatkowsky: $USO Brent and WTI sell down because of a shooting in canada...I m canadian and think this is silly... $SPY $TWTR #Gofigure
Volatility Implied
22 Oct 14 11:27:10
$STUDY Pinned Tweet $STUDY $DXY $SPY $USO $TBT $GLD $VIX ..... unlikely ... not impossible ....... kinda by definition!
Dave Bergstrom
22 Oct 14 11:24:05
Crude Oil was your tell... pointed it out early today. Hopefully $80 holds or stocks could retest Oct lows. $USO $SPY $ES_F $SPX $AAPL $FB
Bill Tsamis
22 Oct 14 11:22:06
$USO could be come a big problem for the bulls
PK
22 Oct 14 11:18:57
"@jmatkowsky: $USO Brent and WTI sell down because of a shooting in canada...I'm canadian and think this is silly..." $SPY $TWTR #Gofigure
Gotham City Capital
22 Oct 14 11:03:22
$USO Oil Under A Bit Of Pressure. Will Be Interested On Another Round Of Selling.. Like $KOG $TPLM $MHR http://t.co/R8soxWTO12
Ximenx
22 Oct 14 11:02:38
RT @DividendMaster: $USO & $UNG both red now .... lotsa energy/driller names up 2-3-5% anyway . Going to be like waking up with fat secret…
Tim Kelleher Corp
22 Oct 14 10:52:25
$USO Oil making new lows looks to take the market with it $ES_F $SPY $QQQ
				
				
By  +Follow October 15, 2013 9:53AM
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