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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
GenX Investor
23 Nov 14 10:24:02
RT @HAInvestor: Week In Review: Gold Erases All Of 2014 Losses; Oil Finally Sees Weekly Gain; NatGas Spikes $GLD $USO $UNG http://t.co/gRQ…
EUR Fractalerts
23 Nov 14 10:21:31
Tell us what you think about this weeks $USO alert. How are you trading it? http://t.co/j42N7vgoOk
smtrader StockTrader
23 Nov 14 10:20:18
"Black Gold" in play http://t.co/JkVOsJiAZa $USO $CL_F $MRO $XOM $CVX $COP $OXY $APA $BP $DVN $SLB $NOV $CHK $FANG $UPL $BTU $WLT $ANR $CLF
Scott Bauman
23 Nov 14 09:39:52
RT @KeySpeculator: $WTIC #crude #oil #charts and #TechnicalAnalysis. http://t.co/4VmjNeP1kt $USO $BNO #Brent $SPX #copper #WallStreet #CBOE…
Keystone Speculator
23 Nov 14 09:24:31
$WTIC #crude #oil #charts and #TechnicalAnalysis. http://t.co/4VmjNeP1kt $USO $BNO #Brent $SPX #copper #WallStreet #CBOE #CME $XOM $RIG $NBR
FXC Alerts
23 Nov 14 09:21:13
What is the $USO going to do next? Get real time alerts and analysis at http://t.co/Gvox05avSo
Sufiy
23 Nov 14 08:34:02
RT @HAInvestor: Week In Review: Gold Erases All Of 2014 Losses; Oil Finally Sees Weekly Gain; NatGas Spikes $GLD $USO $UNG http://t.co/gRQ…
UUP Fractalerts
23 Nov 14 07:41:48
Tell us what you think about this weeks $USO alert. How are you trading it? http://t.co/41KlSCV5Pg
EFT_Fractalerts
23 Nov 14 06:16:09
Confidently trade $USO Crude http://t.co/2wbmSQ076P
Mike Mustafoglu
23 Nov 14 05:36:48
Iran May Propose 1 Million-Barrel #OPEC Cut in Saudi Talks $USO $BNO http://t.co/DKCCk6lagM
Befree
23 Nov 14 05:10:55
RT @zozotrader: $USO weekly chart possible btm in at 28.00 and back over the 29.00 level http://t.co/U5zkvYDlyf
ZOZO
23 Nov 14 04:57:47
$USO weekly chart possible btm in at 28.00 and back over the 29.00 level http://t.co/U5zkvYDlyf
BigBoardScans
23 Nov 14 04:54:39
dDT : $USO http://t.co/cAWJRM2evh
Hugh
23 Nov 14 04:32:54
RT @FA_Forex: New $USO alerts have recently been posted. Check them out now. http://t.co/yu6oVlDZ2q
Ariel
23 Nov 14 04:29:10
RT @lunatictrader1: Outlook and key reversal levels for week of November 24, 2014 http://t.co/feVjwAdzAM $SPY $GLD $USO $TLT $DAX $FTSE $EU…
Alex K
23 Nov 14 04:06:13
RT @FA_Forex: New $USO alerts have recently been posted. Check them out now. http://t.co/yu6oVlDZ2q
cyril widdershoven
23 Nov 14 02:53:55
RT @SeekingAlpha: 4 'cures' for #oil price beyond #OPEC, per expert Richard Zeits: http://t.co/Fx2c3VrXr4 $USO $OIL $UCO $SCO $BNO $DTO htt…
Fractal Forex
23 Nov 14 02:30:30
New $USO alerts have recently been posted. Check them out now. http://t.co/yu6oVlDZ2q
Robin Murray MD CFII
23 Nov 14 02:24:12
#Oil #OPEC #action soon big dips are long term buys $USO $OIH $DIG $UCO #ETF $XOM $COP $OXY $CVX http://t.co/TORfzzPOoU via @YahooFinance
Fractalert
23 Nov 14 02:04:03
New $USO alerts have recently been posted. Check them out now. http://t.co/O3ct0Rp0oo
Cecilia Graziosi
23 Nov 14 01:47:18
Russia: no plans to reduce oil output $USO $OIL $RSX $UCO $SCO $RUSL $BNO $DTO $DBO $RUSS $ERUS http://t.co/Qt4OTL6EKN
LunaticTrader
23 Nov 14 00:43:19
Outlook and key reversal levels for week of November 24, 2014 http://t.co/feVjwAdzAM $SPY $GLD $USO $TLT $DAX $FTSE $EURUSD
Investors Hangout
22 Nov 14 23:43:38
lookn4wins: USO 29.10 Stock Charts $USO United States Oil http://t.co/w76yFDJBdz
Investors Hangout
22 Nov 14 23:43:38
lookn4wins: USO 29.10 Stock Charts $USO United States Oil http://t.co/pUHnq3O9jY
lookn4wins
22 Nov 14 23:39:33
USO 29.10 Stock Charts $USO United States Oil Fund LP (NAR) Any opinions on USO? Please reply to this post. La http://t.co/KynO8z2XA8
Kym L
22 Nov 14 21:05:16
$USO chart https://t.co/nxWAcwlJDY
Dan Bolt
22 Nov 14 20:55:45
RT @harmongreg: What to expect from the stock market this week - Dragonfly Capital $SPY $IWM $GLD $USO $TLT $UUP and more… http://t.co/wZ28…
TV_Trading Ideas
22 Nov 14 19:50:58
USO $USO http://t.co/rbsLnns3Rf
Fractal Trading
22 Nov 14 18:36:23
Tell us what you think about this weeks $USO alert. How are you trading it? http://t.co/mORQbrYqtA
Forex Fractals
22 Nov 14 18:29:44
What is the $USO going to do next? Get real time alerts and analysis at http://t.co/0vD5BpkMb2
luckypete
22 Nov 14 17:35:57
Russia: no plans to reduce oil output http://t.co/xTUiMwPsXb $USO $OIL $RSX $UCO
alex demache
22 Nov 14 17:22:36
RT @harmongreg: $SPY Trends and Influencers November 22, 2014 - Dragonfly Capital http://t.co/zeDejU1iql $IWM $QQQ $VXX $TLT $EEM $GLD $USO…
Fractals
22 Nov 14 17:06:00
Tell us what you think about this weeks $USO alert. How are you trading it? http://t.co/hxo2YWF2nc
Skippy
22 Nov 14 16:54:23
RT @MattGarrett3: Don't forget you have 2 events for #Oil coming, #Iran deadline 11/24 & #OPEC on 27th. $USO $Brent $WTI
BCC
22 Nov 14 16:28:51
$USO China & EU effect was pop and fade. Will see more volatility coming week. Crude oil price - Bottom or more downward.
GC Fractalerts
22 Nov 14 15:57:13
Confidently trade $USO Crude http://t.co/ElXblyFwo6
DIA Fractalerts
22 Nov 14 15:43:16
Confidently trade $USO Crude http://t.co/lF0ZkQxexF
Bidness Etc
22 Nov 14 15:30:17
WTI Crude Oil recovered Friday following the announcement of a cut in interest rates in China http://t.co/VVuXasxC7l $USO
Cameron Fous
22 Nov 14 15:13:48
Day Trader Cribs Tamarindo Edition w/ Cameron Fous! 30% Holiday Sale | $FB $TWTR $USO http://t.co/lvLcyy2I7G https://t.co/8miB1bVGy9
Tweed
22 Nov 14 15:09:23
RT @zozotrader: $USO UPDATE 1-Russia has no plan to cut oil output - energy minister http://t.co/h1A7KOxfLt via @reuters
ZOZO
22 Nov 14 15:00:40
$USO UPDATE 1-Russia has no plan to cut oil output - energy minister http://t.co/h1A7KOxfLt via @reuters
Otto Max Investments
22 Nov 14 13:10:21
@JBigbend $TAN is ready to go Monday am. $USO might have a buyable dip to $29. Their daily charts indicate their runs have just started.
PrivateCapBlogger
22 Nov 14 12:56:40
Russia: no plans to reduce oil output $USO $OIL $RSX $UCO $SCO $RUSL $BNO $DTO $DBO $RUSS $ERUS http://t.co/hdrfTMn4ei
Mark Freeman
22 Nov 14 12:11:27
$GLD update: $SPY what usually happens after everything closes green from equity, to $USO , $tlt, $uup, $GLD. I bet a gap down Monday on so
strader55
22 Nov 14 12:03:27
nlightn: $USO,...Russia: no plans to reduce oil output - nlightn http://t.co/650XdBK6lv
✈™®©⤵⤴$_$:-3
22 Nov 14 12:02:58
RT @sa_article: GLD - On Inflation And Econo-Watch http://t.co/wVAM5DmyaH $DBC $USO $UUP $GLD
jimenezlaaa
22 Nov 14 12:01:32
RT @sa_article: GLD - On Inflation And Econo-Watch http://t.co/wVAM5DmyaH $DBC $USO $UUP $GLD
jimenezlaaa
22 Nov 14 12:00:24
RT @TradersLog: Crude Oil Hovers Near Multi-Year Lows http://t.co/qf2th9Sh4u $CL_F $USO $OIL
jimenezlaaa
22 Nov 14 11:58:32
RT @KymLang: $USO weekly chart shows a reversal candle this week.
jimenezlaaa
22 Nov 14 11:58:13
RT @PerforM84697233: Option Millionaires: nlightn: $USO,...Russia: no plans to reduce oil output http://t.co/MBq1Jg3KuI
				
				
By  +Follow October 15, 2013 9:53AM
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