WTI oil trading near $107 as US debt warning hits markets

WTI oil futures open Tuesday’s trading session back near $107 a barrel after ratings agency Standard and Poor’s cut its outlook on US government debt, while stock markets headed broadly lower.

Latest WTI Oil Price

US Light crude oil futures for June 2011 delivery was trading at $107.34 a barrel, 06.40 GMT this morning in electronic trading on the NYMEX. The US WTI contract closed off Monday’s session down over 2 percent.

US Debt Goes Negative

Standard and Poor’s lowered its outlook to negative from stable, drawing attention to the mounting debt and political gridlock in the US and sending investors running from riskier assets including oil futures.

“Let’s face it, it’s a wake-up call. S&P has sent us a warning sign, and, in the meantime, the market is pricing in the what if?’” said Phil Flynn, an oil analyst with PFGBest in Chicago.

Despite Monday’s sell off, OPEC secretary general Abdullah El-Badri said the oil cartel was concerned by high oil prices. “We see that there is a $15 tyo $20 premium risk at this time.” Badri told reporters in Kuwait.

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WTI oil trading near $107 as US debt warning hits markets