The price of oil slipped closer to $102 a barrel Tuesday after parts of the U.S. government were ordered to shut down because of a budget impasse in Washington.
By early afternoon in Europe, benchmark oil for November delivery was down 18 cents to $102.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 54 cents to close at $102.33 on Monday after trading as low as $101.05.
Just as the U.S. economy is struggling to expand, disagreements among U.S. lawmakers over President Barack Obama's health care law are threatening to slow growth even further. On Monday, the last day of the budget year, Congress failed to reach a critical agreement on short-term funding. That means some of the government must halt operations.
Separately, the government will run out of money to pay its bills by late October unless Congress raises the federal borrowing cap. Typically, lower spending is a negative for oil prices. Analysts said progress in diplomatic efforts to control Syria's chemical weapons and hope for a new agreement on Iran's nuclear program have played an even larger role in bringing down oil prices from highs above $110 a barrel in late August that the U.S. budget crisis.
"Markets have barely reacted to the breakdown of budget negotiations in the U.S.," said a note to clients from Commerzbank in Frankfurt. "An early resolution of the problem is evidently still expected."
Later in the day, investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products. Data for the week ending Sept. 27 is expected to show a build of 2.4 million barrels in crude oil stocks and a draw of 1.4 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Brent crude, the benchmark for international crudes used by many U.S. refineries, was down 36 cents to $108.01 a barrel on the ICE Futures exchange in London. In other energy futures trading on Nymex:
— Wholesale gasoline fell 1.55 cents to $2.6127 per gallon. — Natural gas added 4 cents to $3.60 per 1,000 cubic feet. — Heating oil lost 0.52 cent to $2.9663 per gallon.
Pamela Sampson in Bangkok contributed to this report.