Oil near $93 as weak US economy drags markets down

[August 03, 2011]  SINGAPORE (AP) -- Oil prices fell to near $93 a barrel Wednesday in Asia as investor pessimism about U.S. economic growth dragged down global markets.

Benchmark oil for September delivery was down 57 cents to $93.24 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude lost $1.10 to settle at $93.79 on Tuesday.

In London, Brent crude was down 69 cents at $115.79 a barrel on the ICE Futures exchange.

Oil prices have dropped from near $100 two weeks ago as signs of weak U.S. economic growth batter investor confidence.

On Tuesday, the Commerce Department said consumer spending fell in June for the first time in nearly two years. Meanwhile, MasterCard SpendingPulse's weekly survey of gas stations across the U.S. showed that drivers bought less gas for the 19th consecutive week.

Oil traders often look to stock markets as a barometer of overall investor sentiment, and the Dow Jones industrial average fell 2.2 percent Tuesday. Most Asian stock markets dropped Wednesday.

Markets fell despite a last-minute agreement among U.S. lawmakers to raise the country's debt limit and avoid a default. President Barack Obama signed legislation Tuesday that will cut federal spending by $2.1 trillion or more over the next decade.

"The U.S. economy looks weak, with recent data and events in the stock market likely to make it seem even weaker," energy consultant Cameron Hanover said in a report. "The economy is sinking quickly and history might suggest that a recession is a difficult time for austerity."

A report showed U.S. crude and oil products supplies were mixed. The American Petroleum Institute said late Tuesday that crude inventories fell 3.3 million barrels last week while analysts surveyed by Platts, the energy information unit of McGraw-Hill Cos., had predicted a rise of 2.0 million barrels.

However, inventories of gasoline rose 2.6 million barrels last week while distillates added 1.4 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

In other Nymex trading in September contracts, heating oil fell 2.0 cents to $3.07 a gallon while gasoline dropped 3.3 cents to $3.00 a gallon. Natural gas futures advanced 0.3 cent to $4.16 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.