The U.S. crude oil market ended a choppy week with sharp losses, snapping a four-week rising streak, as the political wrangling in Washington over the debt ceiling led to risk aversion among investors.
The New York benchmark WTI contracts settled at 95.70 dollars a barrel, down 4.17 dollars, or 4.18 percent from a week ago. It was the first weekly loss since late June.
Among all the bearish factors, the stalled debt talks between Democrats and Republicans really made investors nervous. A week ago, markets were still betting a last-minute deal. But this week, uncertainties increased as the two sides continued to fail to reach a deal. Worries about a debt default or rating downgrade pressured oil prices.
"The market is looking weak," Raymond Carbone, a senior oil trader at the New York Mercantile Exchange, told Xinhua, "I think, the expectation is there would be no deal, that's why the market has sold off."
Carbone, also the president of oil brokerage company Paramount Options, said all markets, including the crude oil market, were depressed by the stalled debt negotiations.
"I am disappointed about the way Washington is reacting. They seemed to be unable to agree on anything," he said.
Risk aversion increased sharply. Market participants were cautious, waiting the outcome of U.S. efforts to avoid default.
"People are staying with cash and risking very little." Carbone said, "The trading volume was very poor."
Markets were worrying about a possible default in the United States, According to Carbone.
If there was a default, the oil would go lower at first, but the bottom line would be around 90 dollars a barrel, he added.
Besides the debt woes, the rising inventories data released on Tuesday and Wednesday also weighed on oil prices.
The industry group American Petroleum Institute reported on Tuesday U.S. crude stocks jumped 4.0 million barrels, beating expectations for a drop. One day later, the Energy Information Administration reported an unexpected weekly rise of 2.1 million barrels in the U.S. crude oil inventories. More domestic oil supply pushed the oil prices down, keeping the spread wider between the WTI and London Brent crude.
On top of that, the surprisingly bad U.S. GDP data released Friday added evidence to a softer economy, further pressuring the oil market.
The Commerce Department said the U.S. economy slowed to an annualized growth rate of 1.3 percent during the second quarter of 2011, and revised growth rate for the first quarter down to 0.4 percent from a previous estimated of 1.9 percent.
"Once you see a GDP number has been revised downward, people interpret it into impacts that may have on the future U.S. demand. That is why WTI dropped more than the Brent," Carbone said.
The New York benchmark WTI contracts settled at 95.70 dollars a barrel, down 4.17 dollars, or 4.18 percent from a week ago. It was the first weekly loss since late June.
Among all the bearish factors, the stalled debt talks between Democrats and Republicans really made investors nervous. A week ago, markets were still betting a last-minute deal. But this week, uncertainties increased as the two sides continued to fail to reach a deal. Worries about a debt default or rating downgrade pressured oil prices.
"The market is looking weak," Raymond Carbone, a senior oil trader at the New York Mercantile Exchange, told Xinhua, "I think, the expectation is there would be no deal, that's why the market has sold off."
Carbone, also the president of oil brokerage company Paramount Options, said all markets, including the crude oil market, were depressed by the stalled debt negotiations.
"I am disappointed about the way Washington is reacting. They seemed to be unable to agree on anything," he said.
Risk aversion increased sharply. Market participants were cautious, waiting the outcome of U.S. efforts to avoid default.
"People are staying with cash and risking very little." Carbone said, "The trading volume was very poor."
Markets were worrying about a possible default in the United States, According to Carbone.
If there was a default, the oil would go lower at first, but the bottom line would be around 90 dollars a barrel, he added.
Besides the debt woes, the rising inventories data released on Tuesday and Wednesday also weighed on oil prices.
The industry group American Petroleum Institute reported on Tuesday U.S. crude stocks jumped 4.0 million barrels, beating expectations for a drop. One day later, the Energy Information Administration reported an unexpected weekly rise of 2.1 million barrels in the U.S. crude oil inventories. More domestic oil supply pushed the oil prices down, keeping the spread wider between the WTI and London Brent crude.
On top of that, the surprisingly bad U.S. GDP data released Friday added evidence to a softer economy, further pressuring the oil market.
The Commerce Department said the U.S. economy slowed to an annualized growth rate of 1.3 percent during the second quarter of 2011, and revised growth rate for the first quarter down to 0.4 percent from a previous estimated of 1.9 percent.
"Once you see a GDP number has been revised downward, people interpret it into impacts that may have on the future U.S. demand. That is why WTI dropped more than the Brent," Carbone said.
