Oil prices drift lower on debt worries

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Crude oil prices eased lower on Wednesday with investor sentiment clouded by Europe's debt woes and the deadlock in the United States over a plan to avoid a devastating default, analysts said.

New York's main contract, light sweet crude for delivery in September, fell 90 cents to $98.69 a barrel.

Brent North Sea crude for September declined by 68 cents to $117.61 in London deals.

"Sovereign debt issues continue to cap oil prices, and we suspect that for the larger part of this summer macro concerns and debt-related fears are likely to dominate the fundamentals," Barclays Capital analysts said in a report.

"In the coming days, uncertainty is thus likely to persist," they added.

The United States is the world's biggest oil consuming nation.

US President Barack Obama and his Republican rivals remain divided on how to break an impasse on raising the country's debt ceiling to allow it to pay its bills.

Failure to agree before it runs out of money on August 2 could see the world's richest nation and largest oil user default on its debt, with potentially ruinous global results.

International Monetary Fund managing director Christine Lagarde on Tuesday urged the eurozone to "quickly" implement its plan to fight a sovereign debt crisis, warning that "turbulence could easily resurface" soon.

© 2011 AFP

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