Brent crude oil slid lower to $110.36 at 10:49 GMT on Friday morning as markets waited tentatively for $85 billion dollars worth of spending cuts within the US government to kick in.
The world's largest economy and number one oil consumer was heading toward large scale spending cuts after Democrats and Republicans in Washington failed to compromise on an alternative plan to reduce the deficit.
The International Monetary Fund cautioned that US economic growth could slip by as much as 0.5 percent this year if a new agreement wasn't reached. With the budget cuts set to kick in on Friday, the IMF is expected to lower its global growth forecast if US government officials don't reach a last minute deal.
According to CNBC, many are expecting to see oil trade even lower throughout the next week as the market adjusts to big changes in the US. Since a last minute deal is considered highly unlikely, the global market is expected to suffer in the coming days, and in turn demand for oil will fall as well.
Also weighing on Brent prices was data from China, which showed that both foreign and domestic demand waned after official PMI data posted its lowest reading since September 2012 and fell to 50.1.
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Problems in the Eurozone also brought Brent's prices down as political uncertainty in Italy continued to worry investors. An inconclusive election that showcased Italians' frustration with the current, austerity-focused path to recovery has sparked worries that this type of rejection of the eurozone's current austerity measures could spread to other struggling nations like Spain or Greece.
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