Oil mixed as traders eye US debt standoff

26th July 2011, Comments 0 comments

Crude oil prices were narrowly mixed on Tuesday, with sentiment muted amid a budget standoff in Washington over a plan to avoid a debt default.

New York's main contract, light sweet crude for delivery in September, advanced by just 14 cents to $99.34 a barrel.

Brent North Sea crude for September eased seven cents to $117.87 in London deals.

"Investors (are) keeping to the sidelines as Washington debates the debt ceiling," analysts from Phillip Futures said in a commentary. The United States is meanwhile the world's biggest consumer of oil.

The US treasury says Congress must raise the government's $14.29 trillion debt limit by August 2 to prevent a default, which would have devastating repercussions on the global economy.

But Democrats and Republicans are deadlocked, with bitter disagreements over tax increases and spending cuts.

US President Barack Obama warned in a primetime televised speech to the nation on Monday that a default would risk "a deep economic crisis".

Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally. However, it can only do so until August 2.

At that point, US leaders will have to cut an estimated 40 percent from spending and stop paying either its debts or other obligations such as government health or retirement benefits.


© 2011 AFP

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