Oil lower on US debt concerns

SINGAPORE: Oil fell in Asian trade Monday on concerns over a possible US default if President Barack Obama and lawmakers fail to reach a deal to raise the country's debt ceiling, analysts said.

New York's main contract, West Texas Intermediate light sweet crude for September delivery, sank $1.08 to $98.79 a barrel, and Brent North Sea crude -- also for September delivery -- dropped 60 cents to $118.07.

"The uncertainty over the US debt saga has created concerns for the oil market," said Victor Shum, an analyst with energy consultancy Purvin and Gertz. "If it defaults, it impacts potentially economic growth in the US and so it's a sort of a domino impact," he said.

The White House and top lawmakers scrambled Sunday for a deal to stop the world's richest country from an unthinkable and ruinous default on its debt, which would affect the rest of the world.

Obama, his Democratic allies and Republican foes gave little sign of progress toward a compromise to raise the $14.3 trillion limit on borrowing by the US government, which will run out of cash to pay its bills on August 2.

Finance and business leaders have warned that failure to raise the US debt ceiling by August 2 would send shockwaves through the fragile world economy, while Obama has predicted a default would trigger economic "Armageddon". (AFP)