Brent crude oil reached above $110 on Monday morning trading at $110.56 at 11:27 GMT. The commodity was still under heavy pressure from US fiscal problems as well as uncertainty in Europe.
After US lawmakers were unable to come to an agreement about the nation's debt, the “sequester”, a series of automatic spending cuts, kicked in on Friday. The cuts affect everything from education to military funding and have many investors worried about the future of US oil demand.
According to CNBC, the International Monetary Fund has forecast that the spending cuts could reduce the nation's economic growth by nearly 0.5 percent, something that would weigh on the nation's oil demand.
Worries about China's oil demand also brought Brent prices down after China's factory growth figures were at their lowest in four months in February. With the two largest oil consumers wrapped up in economic problems, many believe that the global demand for oil will drop.
Sentiment in the Eurozone also took a nosedive after Italian elections left the nation without a solid government and could mean another election in the future. As the wildly different candidates struggle to form a coalition, investors have their eyes on the European Central Bank's monthly meeting, coming up on Thursday.
Although the general consensus remains that bank President Mario Draghi will leave the current interest rate unchanged, there is speculation about a rate cut in the future. Draghi's press conference following the meeting will be closely watched for clues about region's health.
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