Oil rises above $97 after US debt deal reached

[August 01, 2011]  SINGAPORE (AP) -- Oil prices rose above $97 a barrel Monday in Asia after U.S. lawmakers struck a last-minute agreement to raise the government's debt limit, avoiding a default.

Benchmark oil for August delivery was up $1.71 to $97.42 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude dropped $1.74 to settle at $95.70 on Friday.

In London, Brent crude was up $2.80 at $119.54 per barrel on the ICE Futures exchange.

President Barack Obama announced late Sunday that the deal agreed to by Republican and Democratic leaders would cut more than $2 trillion of federal spending over the next decade. Congress is expected to vote on the bill Monday.

Oil prices sputtered down from near $100 last week amid investor concern a U.S. debt default could trigger a recession and hurt crude demand.

Crude also dropped last week because of evidence U.S. economic growth is slowing. The U.S. Commerce Department said Friday that the world's biggest economy grew at an annual rate of only 1.3 percent in the second quarter.

"Friday's GDP data could charitably be described as shocking," energy consultant The Schork Group said in a report. "The U.S. economy is stalling."

Two reports released Monday showed manufacturing slowed in July in China, the world's second-largest crude consumer.

Investors will be closely watching the latest data about U.S. manufacturing, auto sales and unemployment this week.

In other Nymex trading in August contracts, heating oil rose 7.6 cents to $3.18 a gallon while gasoline gained 5.3 cents at $3.11 a gallon. Natural gas futures added 2.2 cents at $4.17 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.