As a potential government shutdown is less than 24 hours away, the price of oil dropped in early Monday trading to its lowest since early July.
West Texas Intermediate crude slated for delivery in November was off over 1 percent to $101.67 per barrel on the New York Mercantile Exchange, and has lost about 5.5 percent throughout the month of September, despite having gained about the same amount throughout the quarter.
The last two months that have seen oil prices spike on unrest in Egypt subsequent to a military coup, as well as post-revolution turmoil in Libya that has seen production in that country come to a near halt, and, of course, the situation in Syria, where a chemical weapons attack nearly triggered US intervention into the nearly 3-year old civil war.
Indeed, WTI was not long ago trading at over $108 per barrel. A government shutdown, however, is not the only potential calamity that is sending oil prices lower. Assuming that the shutdown is averted, it would still likely be followed by a fierce and nasty debate over the nation’s debt limit, which allows the government to pay bills it has already incurred.
Addressing the nation last Friday, President Obama noted that nobody actually knows how far-reaching the consequences of the US defaulting on its debts could be. For the time being, WTI is not the only crude that is lower on the news. Natural gas for November delivery was 1.3 percent lower to $3.53 per British Thermal Unit, and Brent crude was 0.6 percent lower to just under $108 per barrel on the UK’s ICE Futures Exchange.
While investors and markets wait for all of this to sort itself out, some analysts such as Kevin Kerr of Kerr Trading International are predicting that WTI could drop as low as $90 until the crisis reaches a suitable conclusion. On Monday, Kerr said in an interview that “Traders are likely to have oil test the $100 mark with a range of trade staying between $90 and $110 until the crisis is resolved and normal function returns.”
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