The price of oil slipped below $104 on Thursday as the U.S. government shutdown continued and after a report showed a rise in U.S. crude inventories.
By early afternoon in Europe, the benchmark oil contract for November delivery was down 15 cents to $103.95 a barrel in electronic trading on the New York Mercantile Exchange. Markets have been weighed down this week by the partial shutdown of the U.S. government after a congressional dispute over funding for President Barack Obama's health care program. There are concerns that a prolonged halt to government activities could reduce demand for energy and hurt confidence in the economy.
"The U.S. government shutdown continues to dominate the markets, weighing on market sentiment," said a report from analysts at Sucden Financial Research in London. Economic indicators did not help, either. The Labor Department reported that the number of Americans seeking unemployment benefits remained near six-year lows, but while employers are have stopped laying off workers, the creation of new jobs has slowed in recent months.
Meanwhile, the Energy Department's Energy Information Administration said Wednesday that U.S. stockpiles of crude oil rose 5.5 million barrels, to 363.7 million barrels, last week. That was more than twice as much as market expectations and suggested weak demand.
Thursday's drop in the oil price came after strong gains Wednesday, when it rose more than $2 a barrel — the most in two weeks — on the prospect of more oil shipping between a key U.S. Midwest hub and the Gulf Coast.
Brent crude, a benchmark used to price imported crude used by many U.S. refineries, was up 52 cents to $109.71 in London. In other energy futures trading on Nymex: — Wholesale gasoline rose 3.58 cents to $2.6645 per gallon.
— Natural gas were unchanged at $3.542 per 1,000 cubic feet. — Heating oil added 2.2 cents to $3.0147 per gallon.
Pamela Sampson in Bangkok contributed to this report.