Oil traded near a two-day low in New York as President Barack Obama warned that the nation’s burgeoning debt threatens to do “serious” damage to the U.S. economy, the world’s largest crude consumer. Obama called on lawmakers to put politics aside to reach a deal on a “balanced approach” after Republicans and Democrats attacked each others’ plans for the lifting of the nation’s $14.3 trillion debt ceiling. Futures pared losses after Obama’s comments sent the dollar weaker, increasing the appeal of raw materials to investors. An Energy Department report tomorrow may show U.S. crude stockpiles dropped for an eighth week. “It’s a sentiment impact where people suddenly decide they want to be in safe-haven type assets and away from risk type exposure and of course oil is a risk exposure,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicts oil in New York will average $115 this year. “A stronger move will have to be predicated on the U.S. showing more signs of recovery.” Crude for September delivery was at $99.24 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 12:11 p.m. Sydney time. It slipped as much as 40 cents to $98.80 earlier. The contract yesterday dropped 67 cents, or 0.7 percent, to $99.20, the lowest since July 21. Prices are 26 percent higher the past year. Brent oil for September settlement fell 29 cents, or 0.3 percent, to $117.65 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $18.42 a barrel to U.S. futures, compared with a record close of $22.63 on July 14. Dollar Falls The dollar fell to a record low versus the Swiss franc as Obama warned of dire economic consequences unless the nation’s debt ceiling is increased by an Aug. 2 deadline. The franc was at 80.35 centimes per dollar from 80.61 in New York yesterday. The greenback weakened to $1.4423 against the euro from $1.4377. Obama blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. The Energy Department report will probably show U.S. crude inventories declined 1.75 million barrels from 351.7 million last week, according to the median of eight analyst estimates in the Bloomberg News survey. Gasoline supplies may have climbed 125,000 barrels, the survey shows. U.S. stocks retreated yesterday, pulling the Standard & Poor’s 500 Index down from a two-week high. The S&P 500 fell 0.6 percent to 1,337.43 at the 4 p.m. close in New York. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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