The price of oil held above $101 a barrel Wednesday as the deadline for U.S. politicians to raise the government debt ceiling — and avoid a potentially catastrophic default — was only hours away.
By early afternoon in Europe, benchmark crude for November delivery was up 3 cents at $101.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.20 to close at $101.21 on Tuesday.
The price of oil has swung back and forth for two weeks as lawmakers attempt to resolve an impasse that has left the government partially closed and the markets worried about the U.S. defaulting on its debt for the first time. The U.S. has to increase the amount of debt it can sell by Oct. 17.
On Wednesday, Democratic and Republican leaders of the Senate were optimistic that a last-minute bipartisan deal would be worked out and voted on in Congress, but the politicians' inability to reach an agreement sooner and the effects of the government shutdown on the economy was cause for concern.
"The uncertain economic conditions in the U.S. have caused further volatility and nervous trading in the oil market, with investors worrying about a slowdown in the US oil demand," said a report from Sucden Financial Research in London.
Government agencies including the Energy Information Administration, which keeps track of U.S. crude and fuel supplies, have stopped many services. The EIA's weekly report on supplies gives an indication about the strength of demand and often pushes the oil price up or down.
Also setting a ceiling over prices were talks on Iran's nuclear program in Geneva between the Islamic Republic and six major world powers. A deal would likely end U.S.-led economic sanctions, which have greatly reduced Iran's oil exports over the past couple of years.
"Progress continues to be made and it seems that Iran is proposing a detailed framework rather than philosophical ideas," said Olivier Jakob of Petromatrix in Switzerland. Brent crude's December contract, the benchmark used to set prices for international crudes used by many U.S. refineries, was up 10 cents at $109.52 on the ICE Futures exchange in London.
In other energy futures trading on Nymex: — Wholesale gasoline rose 0.58 cent to $2.6502 a gallon. — Natural gas added 5.1 cents to $3.841 per 1,000 cubic feet. — Heating oil gained 0.5 cent to $3.022 a gallon.