The price of oil hovered near $102 a barrel Wednesday after U.S. government workers were ordered off the job because of a budget impasse in Washington.
By early afternoon in Europe, benchmark oil for November delivery was up 14 cents to $102.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 29 cents to close at $102.04 on Tuesday.
Demand for oil in the U.S. could weaken if the shutdown curbs economic growth and continues to stop 800,000 federal workers from commuting. The workers were furloughed after U.S. lawmakers failed to agree on a budget measure to fund government operations after the fiscal year ended Monday.
“Oil prices are very much linked with U.S. consumption,” said Andrew Sullivan, sales trader at Kim Eng Securities in Hong Kong. “With 800,000 workers not being paid, short-term demand is likely to be curtailed.”
Prices were also under pressure from a report released Tuesday by the industry-funded American Petroleum Institute which said U.S. stockpiles of crude oil rose by 4.55 million barrels last week.
The Energy Department’s Energy Information Administration will release its own report — the market benchmark – later Wednesday. A survey of analysts by Platts, the energy information arm of McGraw-Hill Cos., showed expectations were for a build of 2.4 million barrels in crude oil stocks and a draw of 1.4 million barrels in gasoline stocks for the week ending Sept. 27.
Over the past days, a deal to control Syria’s chemical weapons and an apparent thaw in relations between the United States and Iran over the Islamic Republic’s nuclear program have diminished the risk of a disruption of Middle East oil supplies and bought oil prices down from above $110 a barrel.
“With no news to support prices, fading geopolitical threats and ample supplies are still having an adverse impact,” analysts from Commerzbank in Frankfurt said in a note to clients. “In this climate, we envisage oil prices continuing to decline.”
Brent crude, a benchmark used to price imported crude used by many U.S. refineries, was up 39 cents to $108.33 in London.
In other energy futures trading on Nymex:
— Wholesale gasoline fell 0.24 cent to $2.6082 per gallon.
— Natural gas added 0.3 cent to $3.612 per 1,000 cubic feet.
— Heating oil rose 2 cents to $2.9753 per gallon.
Pamela Sampson in Bangkok contributed to this report.