Oil falls as U.S. government cuts spending
BANGKOK The price of oil fell Monday after political leaders in Washington failed to stave off automatic cuts in government spending that could hurt the U.S. economy.
Benchmark oil for April delivery was down 34 cents to $90.34 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $1.37 to close at $90.68 a barrel on the Nymex on Friday, its lowest close this year.
Automatic government spending cuts of roughly $85 billion kicked in on Friday after President Barack Obama and Congress failed to meet a deadline for striking a deal to avert or soften the reductions. Negotiations on Sunday ended in a bitter impasse, and what happens next is anyone's guess.
The International Monetary Fund has predicted that the spending cuts could reduce U.S. growth by some 0.5 percentage point in 2013.
The current budget crisis comes just two months after tense year-end negotiations yielded a New Year's Day deal keeping the U.S. government from plunging over a "fiscal cliff" of huge spending cuts and tax increases.
In China on Friday, two surveys showed that manufacturing growth slowed last month, as demand faltered and factories shut down for the Lunar New Year holiday.
Brent crude, used to price many kinds of oil imported by U.S. refineries, rose 10 cents to $110.50 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
- Wholesale gasoline fell 0.2 cent to $3.126 a gallon.
- Heating oil lost 0.1 cent to $2.929 a gallon.
- Natural gas fell 1.9 cents to $3.437 per 1,000 cubic feet.