Oil prices dip as US reaches impasse on healthcare program, could result in unemployment issues

30-Sep-13

New York's main contract, West Texas Intermediate for delivery in November dropped by over a dollar to US$101.7, while Brent North Sea crude for November fell to US$107.8. This fall was triggered by a budget impasse in the United States as the House of Representatives approved a Republican bill seeking to delay President’s health care law. As Democrats refuse to accept demands for cutbacks in the healthcare programme, there are fears that hundreds of thousands of US federal employees will be sent home from Tuesday. As per Business Standard, investors are also eyeing a more critical row over the US debt ceiling, which must be raised before mid-October, when the government runs out of money to pay its bills. If the spending limit is not hiked, Washington will be unable to service its debt obligations and will in turn default. A similar stand-off in 2011 sent global markets sliding and led to a historic downgrade of the country's AAA sovereign rating by Standard & Poor's. DBS Bank said a forced shutdown of the US government could see the US Federal Reserve expanding its US$85 billion-a-month bond buying program, instead of winding it down as expected.