Oil prices slide on growth, debt worries

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Oil prices fell on Wednesday, dragged down by concerns that demand will weaken due to slowing economic growth and the eurozone debt crisis as traders awaited data on US crude inventory levels.

New York's main contract, light sweet crude for delivery in September, slipped 39 cents to $93.40 a barrel.

Brent North Sea crude for September shed 68 cents to $115.78.

"Softer macroeconomic data continue to weigh on oil prices and we expect this trend to continue in the short term," said analysts at Barclays Capital.

Official data on Tuesday showed consumer spending in the United States declined in June, the first drop in nearly two years, indicating the economy could be stalling.

Traders were meanwhile awaiting the latest official snapshot of energy stockpiles in the United States, the world's leading consumer of oil.

"Economic concerns have overshadowed the US debt deal with regards to oil prices," said Gary Hornby, an analyst at energy research group Inenco.

"The focus has now shifted to the poor recent economic data for the US, China and the UK, coupled with the eurozone debt crisis and the potential drop in the US credit rating."

World stock markets were under pressure again on Wednesday as relief over a US debt deal gave way to renewed fears about weakening economic growth, sending 'safe-haven' gold to historic highs.

Analysts said a resurgence in concerns that the eurozone debt crisis remains a real threat to Italy and Spain added to the negative tone after days of sustained and heavy losses.

An emergency austerity bill signed Tuesday by US President Barack Obama averted a US debt default which would have slammed the global economy -- and worldwide energy demand.

The debt deal lifts cash-strapped Washington's $14.3-trillion debt limit by up to $2.4 trillion while cutting at least $2.1 trillion in government spending over 10 years but analysts said broader concerns remained an issue and much more needed to be done.

© 2011 AFP

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