US government shutdown continues-sparks fears of a chaotic debt default, oil dips

10-Oct-13

New York's main contract, West Texas Intermediate for delivery in November, dipped to US$103.4, while Brent North Sea crude for November slipped to US$110. Oil prices continue to fall as progress falters in ending the US government shutdown that has sparked fears of a debt default. As the partial US government shutdown entered its ninth day, President Barack Obama refused to give in to demands from Republicans to make cuts to his healthcare law before they agree to a new budget and raise the country's borrowing limit. Interestingly, he has accepted a short-term deal to lift the debt ceiling and reopen the government -- a move that would effectively postpone the crisis for a number of weeks. Failure to lift the ceiling by a October 17 deadline will mean the government is unable to pay its bills or service its debts, causing a default that analysts have warned could send the world economy back into recession. A report by EIA showed that U.S. crude supplies grew last year by the most in a year. The Energy Information Administration (EIA) reported that U.S. crude supplies increased by 6.8 mln barrels to 370.5 mln barrels for the week ended Oct. 4, more than four times than what analysts expected.