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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]

Results for uso
Stage Analysis
20 Apr 14 13:06:59
Commodities charts and Dollar Index $USDX $GC_F $GLD $CL_F $USO $HG_F $JJC http://t.co/zRjYBtAC3o http://t.co/4bTwHHYNyH
Stockaholics
20 Apr 14 12:46:14
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20 Apr 14 10:29:50
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20 Apr 14 09:57:10
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B
20 Apr 14 09:55:27
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20 Apr 14 09:54:40
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20 Apr 14 09:53:50
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20 Apr 14 09:52:56
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Gary Thomson
20 Apr 14 09:52:16
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Chris Perruna
20 Apr 14 09:39:17
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MattBurns
20 Apr 14 09:38:29
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20 Apr 14 09:36:25
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David Taylor
20 Apr 14 09:34:52
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 Lin/林莹君
20 Apr 14 09:34:06
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Chris Perruna
20 Apr 14 09:26:20
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20 Apr 14 09:19:05
Our Penny Stock Newsletter Picks, gained 5,000% in 4 months! Subscribe Today: http://t.co/5B5saivZk0 $USO $EWP $CORN
David Beckett
20 Apr 14 09:09:09
RT @StockTwits: "@howardlindzon: Where is Life After Tech in 2014? http://t.co/8myvLqVCGe {new blog post} $XLE $USO $FSLR ht @allstarcharts"
Fractalert
20 Apr 14 09:04:07
Tell us what you think about this weeks $USO alert. How are you trading it? http://t.co/NyON7X7gqH
MattBurns
20 Apr 14 08:56:45
$USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/rGSgHzwYJU $SPY
David Taylor
20 Apr 14 08:55:51
$USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/gXmU2aD1gX $SPY
Gary Thomson
20 Apr 14 08:55:12
$USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/rl50j5Jtpf $SPY
Gary Thomson
20 Apr 14 08:54:34
$USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/75WHumlcAg $SPY
Vishal Desai
20 Apr 14 08:53:54
RT @don_right: $USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/hTnsR6ZIk…
Don Right
20 Apr 14 08:53:49
$USO Energy sector remains strong with +10% gain in the last 3 months in accordance with the forecast: http://t.co/hTnsR6ZIk8 $SPY
StockTwits
20 Apr 14 08:33:46
"@howardlindzon: Where is Life After Tech in 2014? http://t.co/8myvLqVCGe {new blog post} $XLE $USO $FSLR ht @allstarcharts"
Ms.Pivots
20 Apr 14 08:24:58
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20 Apr 14 07:46:48
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FinancePress
20 Apr 14 07:42:36
$USO Ukraine Tensions May Benefit Commodities Bulls: Ukraine Tensions May Benefit Commodities Bulls Motley Fo... http://t.co/fVRkJ5jiBD
Stock_Tracker
20 Apr 14 07:28:23
US Oil (USO) 37.66 $USO Ukraine Tensions May Benefit Commodities Bulls Richard Cox, The Motley Fool - Motley F http://t.co/Yqw0lffGel
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20 Apr 14 06:59:52
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Addyson Annesley
20 Apr 14 05:55:13
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Nat Gas
20 Apr 14 05:51:19
Weekly Commodities Market Summary - Crude Oil, Natural Gas, Gold, Silver, Coffee and more > http://t.co/bdbHeVRPBk $USO $UNG $GLD $SLV
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20 Apr 14 05:48:15
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20 Apr 14 05:09:43
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20 Apr 14 03:12:38
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20 Apr 14 03:05:26
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20 Apr 14 02:33:47
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19 Apr 14 23:52:02
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19 Apr 14 23:25:33
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19 Apr 14 21:44:53
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19 Apr 14 21:13:05
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19 Apr 14 21:07:19
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19 Apr 14 20:35:38
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19 Apr 14 19:45:02
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Fractal Alerts
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19 Apr 14 16:38:20
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Laurence Huckin
19 Apr 14 14:16:05
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The Amazing Seven
19 Apr 14 12:50:06
$USO Why You Should Short Crude Oil To http://t.co/75wLdNXQDG
				
				
By  +Follow October 15, 2013 9:53AM
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