Oil lower in Asia on concerns over US debt profile

SINGAPORE—Oil fell in Asian trade on Wednesday on lingering concerns over the long-term health of the US economy, despite a congressional deal to raise the debt ceiling, analysts said.

New York’s main contract, light sweet crude for September delivery eased 49 cents to $93.30 a barrel and Brent North Sea crude for September delivery sank 65 cents to $115.81.

The emergency austerity bill signed Tuesday by President Barack Obama averted a debt default that would have wide repercussions for the global economy.

The deal lifts cash-strapped Washington’s $14.3 trillion debt limit by up to $2.4 trillion while cutting at least $2.1 trillion in government spending over 10 years, but analysts said broader concerns were still an issue.

“Our economists believe that, though US policymakers have agreed on a deal… it does not stabilise the debt-GDP ratio,” analysts from Barclays Capital said in a report.

“Further, this debt profile does not appear to meet the criteria laid down by rating agencies, and could act as a trigger for a downgrade, though it may be sufficient to push this back to Q4 2012.”

Compounding these worries was new government data showing US consumer spending declined in June, the first drop in nearly two years, pointing to the economy stalling at mid-year.

“Softer macroeconomic data continue to weigh on oil prices, and we expect this trend to continue in the short term,” Barclays Capital analysts said.