Oil prices retreat on US uncertainties

2nd August 2011, Comments 0 comments

Crude oil prices fell on Tuesday on concerns for the US economy, despite a critical debt deal to avert a default, analysts said.

New York's main contract, light sweet crude for delivery in September, slipped 46 cents to $94.43 a barrel.

Brent North Sea crude for September shed 18 cents to $116.60.

"The threat of US insolvency would appear to have been averted, but the worry now is the country's economy," said Commerzbank analyst Carsten Fritsch.

"The US economic growth figures announced last on Friday were highly disappointing, and then yesterday it was revealed that the purchasing managers' index for manufacturing had taken a dive. As a result, oil came under pressure."

Trading had been very volatile on Monday, initially rising after the US reached an 11th-hour deal to avert a potentially devastating debt default in the world's largest economy.

They later retreated after data showed US manufacturing slowed to a near standstill in July, highlighting increased and deep-seated concerns about the economy.

The Republican-led House voted on Monday to approve a package to raise the limit on US borrowing and enact at least $2.1 trillion in spending cuts over the next decade.

The Democratic-led Senate was expected to approve the emergency measure in a noon (1600 GMT) vote Tuesday -- scarcely 12 hours before a midnight deadline by which the world's richest nation would run out of cash to pay its bills.

© 2011 AFP

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