Oil down over US budget, China growth concerns
Oil prices were weighed down Tuesday by concerns about an apparent deadlock among U.S. leaders to strike a budget deal before year's end and growing uncertainty about the strength of China's economic recovery.
Benchmark crude for January delivery was down 11 cents to $85.45 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 37 cents to close at $85.56 per barrel on the Nymex on Monday.
Brent crude, used to price international varieties of oil, was down 19 cents per barrel to $107.14 per barrel on the ICE Futures exchange in London.
An abrupt fall in China's export growth and slowing import growth suggests that the recovery in the world's No. 2 economy is faltering, analysts at Capital Economics said in a report.
The data "have added to our doubts about the strength and sustainability of China's rebound," the report said. "The weekend's figures on investment, retail sales and industrial production were more encouraging but they underlined that recent strength has been driven by infrastructure spending rather than a broad-based pick-up across the economy."
Investors are also suffering jitters about whether President Barack Obama will reach a budget deal with congressional Republicans before the "fiscal cliff" of tax increases and spending cuts takes effect in January - at a cost of hundreds of billions of dollars to the U.S. economy.
Obama has been insisting on higher taxes for the wealthiest Americans, while Republicans are pushing for cuts in government spending on entitlement programs.
In energy futures trading on Nymex:
- Heating oil was unchanged at $2.90 a gallon.
- Natural gas fell 3 cents to $3.43 per 1,000 cubic feet.
- Wholesale gasoline fell 0.1 cent to $2.597 a gallon.
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