Crude oil prices drop on US doubts

18th July 2011, Comments 0 comments

Crude prices fell on Monday, pulled down by concerns over debt problems in the United States, the world's biggest oil-consuming nation, analysts said.

New York's main contract, light sweet crude for delivery in August, slid 50 cents to $96.74 a barrel.

Brent North Sea crude for September delivery slipped 90 cents to $116.36 per barrel approaching midday in London.

A political impasse in the United States over its debt crisis continued to hang over crude oil prices, said Victor Shum, a senior analyst at Purvin and Gertz energy consultants.

"The debt situation in the US is bearish for the oil market. The concern there has got to do with whether the Obama administration and Republican party will agree to move the US debt ceiling," he added.

On Sunday, a bipartisan Senate plan took shape to allow US President Barack Obama to avert a potentially catastrophic debt default in return for $1.5 trillion in spending cuts over a decade.

With two weeks to go until what Obama has termed economic "Armageddon", the rival Senate leaders, Mitch McConnell of the Republicans and Harry Reid of the Democrats, were working on a complex path out of the crisis.

But traders were sceptical on the prospects of a near-term political resolution after five straight days of testy White House talks with congressional leaders ending Thursday with no deal in sight.

Oil prices had meanwhile risen on Friday after the European Union released the results of closely watched bank stress tests, revealing that its banks had fared better than expected.

The end-of-week rally made up some ground that had been lost on Thursday, when New York crude prices had dived by $2.36.

© 2011 AFP

0 Comments To This Article