Oil prices decline on looming US government shutdown

Oil prices dropped Monday on concerns that a possible government shutdown may dampen the demand from the world's largest oil-consuming country. U.S. House Speaker John Boehner on Sunday urged the Senate to take action in a timely manner and pass a stopgap government funding bill in order to avert the first partial government shutdown since 1996. The House of Representatives voted early Sunday to pass a short- term government funding bill to fund the federal government's operations until Dec. 15 and delay the implementation of U.S. President Barack Obama's signature health care law for one year. But the Senate vetoed the bill Monday afternoon, increasing the likelihood of a shutdown. Uncertainties over whether Washington will raise its looming debt limit and reach a budget deal for the new fiscal year continued to put a damper on the market. A shutdown would prompt federal agencies to suspend a large range of activities. Morgan Stanley estimated that every week of a shutdown would shave 0.15 percentage point from the quarterly pace of U.S. gross domestic product. On the economic front, the Chicago Business Barometer rose 2.7 points to 55.7 in September from 53.0 in August, supported by production, new orders and supplier deliveries, the Institute for Supply Management-Chicago said Monday. Meanwhile, Texas factory activity expanded in September at a slightly faster pace than in August, according to Federal Reserve Bank of Dallas. The production index, a key measure of state manufacturing conditions, rose from 7.3 to 11.5. Light, sweet crude for November delivery decreased 0.54 U.S. dollar to settle at 102.33 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery lost 0.26 dollar to close at 108.37 dollars a barrel.