Oil mixed as traders eye US debt standoff

Agence France-Presse

Posted at Jul 26 2011 02:08 PM | Updated as of Jul 26 2011 10:08 PM

SINGAPORE - Oil was mixed in Asian trade Tuesday, with sentiment muted amid a budget standoff in Washington as lawmakers struggle to agree on a plan to avoid a default by the world's biggest economy.

New York's main contract, light sweet crude for September delivery, advanced 37 cents to $99.57 a barrel and Brent North Sea crude for September delivery eased 29 cents to $117.65.

"Investors (are) keeping to the sidelines as Washington debates the debt ceiling," analysts from Phillip Futures said in a commentary.

The US Treasury says Congress must raise the government's $14.29 trillion debt limit by August 2 to prevent a default, which would have devastating repercussions on the global economy.

But Democrats and Republicans are deadlocked, with bitter disagreements over tax increases and spending cuts.

US President Barack Obama warned in a primetime televised speech to the nation on Monday that a default would risk "a deep economic crisis".

Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally. However, it can only do so until August 2.

At that point, US leaders will have to cut an estimated 40 percent from spending and stop paying either its debts or other obligations such as government health or retirement benefits.