Oil falls to near $94 as US economy weakens

[August 02, 2011]  SINGAPORE (AP) -- Oil prices fell to near $94 a barrel Tuesday in Asia amid new evidence that the U.S. economy is slowing.

Benchmark oil for August delivery was down 69 cents to $94.20 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 81 cents to settle at $94.89 on Monday.

In London, Brent crude was down 38 cents at $116.43 a barrel on the ICE Futures exchange.

A jump in the oil price Monday -- sparked by an agreement to raise the U.S. debt limit and cut spending -- fizzled as traders turned to disappointing industrial production data. The Institute for Supply Management said manufacturing activity in the U.S. barely grew in July, the lowest reading since July 2009.

"The soft patch is getting patchier still," HSBC economist Frederic Neumann said. "The message from the U.S. and Europe is that the industrial sector has decelerated further."

The weaker manufacturing numbers fed into fears that the U.S. could be slipping back into recession. The Commerce Department said last week that the economy grew an annualized 1.3 percent in the second quarter, and it revised first quarter growth to 0.4 percent from 1.9 percent.

"After seeing the horrible GDP number and revision last week, there are a lot more concerns about where this economy is headed," energy analyst and trader Blue Ocean Brokerage said in a report.

In other Nymex trading in August contracts, heating oil fell 1.8 cents to $3.08 a gallon while gasoline dropped 1.6 cents at $3.04 a gallon. Natural gas futures slid 0.2 cent at $4.19 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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