Crude Oil Ends Lower On Weak Dollar, Shutdown

(RTTNews) - U.S. crude oil pared much of the losses but ended lower for a third straight session Tuesday, as investors continued to mull over the impact of the partial shutdown of the U.S. Government on oil demand. The dollar trended lower against a basket of major currencies following the shutdown after the Congress and the Senate failed to reach a consensus on the budget and debt.

The U.S. government was forced into a partial shutdown at midnight on Monday, after Republicans and Democrats were unable to reach an agreement on a new spending bill. The root contention was President Barack Obama's Affordable Care Act, which Democrats say will provide health insurance at reasonable rates but Republicans say is unconstitutional and will hurt business.

The Republican-controlled House passed a bill that would have kept the government running but delayed the implementation of Obamacare. However, the Democratic controlled Senate rejected the legislation, resulting in the first government shutdown in seventeen years.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, dropped $0.29 or 0.3 percent to close at $102.04 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for November delivery scaled a high of $102.58 a barrel intraday and a low of $101.06.

Yesterday, oil settled lower extending its two-month low on increasing concerns of a possible U.S. government shutdown over the budget and debt ceiling impasse, even as the dollar weakened against a basket of major currencies. Investor anxiety rose with the deadline drawing closer, and the onus on Congress to pass a short-term budget by midnight Monday to keep the government open.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.15 on Tuesday, down from 80.23 late Monday in North American trade. The dollar scaled a high of 80.32 intraday and a low of 79.86.

The euro traded higher against the dollar at $1.3533 on Tuesday, as compared to its previous close of $1.3526 late Monday in North America. The euro scaled a high of $1.3588 intraday and a low of $1.3518.

In economic news from the U.S., the Institute for Supply Management said its purchasing managers index edged up to 56.2 in September from 55.7 in August, with a reading above 50 indicating growth in the manufacturing sector. Economists had been expecting the index to dip to 55.0.

From the eurozone, Germany's unemployment rate rose to seasonally adjusted 6.9 percent in September from 6.8 percent in August, a Federal Labor Agency report showed. The rate was expected to remain unchanged at 6.8 percent. At the same time, the number of unemployed people increased sharply by 25,000, while it was forecast to drop by 5,000. In August, unemployment rose by 9,000.

Eurozone manufacturing sector expanded at a slower pace in September, final results of a survey by Markit Economics confirmed. The headline purchasing managers' index edged down to 51.1 in September from August's 26-month high of 51.4. The outcome matched the flash estimate released last month.

Meanwhile, the eurozone jobless rate remained unchanged at seasonally adjusted 12 percent in August, Eurostat reported. Economists had forecast the unemployment rate to stay at July's originally estimated 12.1 percent.