Oil prices rose to near US$100 a barrel Tuesday as the dollar continued to weaken on the back of the failure of U.S. leaders to make progress in raising the government debt limit ahead of next week's deadline. By early afternoon in Europe, benchmark oil for September delivery was up 47 cents to $99.67 a barrel in electronic trading on the New York Mercantile Exchange. Crude lost 67 cents to settle at $99.20 on Monday. In London, Brent crude gained 31 cents to $118.25 per barrel on the ICE Futures exchange. Republican and Democratic leaders rejected each others' government spending and debt proposals Monday as an Aug. 2 deadline looms for Congress to raise the government's $14.3 trillion debt limit. Without action by that date, the Treasury will be unable to pay all its bills, which could lead to a debt default and undermine the global economy. "It's going to be tough over these next few days as the government plays the default card," Blue Ocean Brokerage said in a report. "One simple announcement that things are resolved will snap the markets back." Investor concern has grown this week about the potential economic damage that could be caused by not raising the debt limit. However, traders are still factoring in expectations that an agreement will be reached before the deadline passes. "The continued lack of progress in negotiations has been absorbed surprisingly well by the equities and oil markets," Ritterbusch and Associates said in a report. "We still feel that a breakout of the recent trading range will eventually develop to the upside, but such a development will likely demand some form of agreement regarding the debt ceiling." A weaker U.S. dollar made commodities cheaper for investors with other currencies and helped boost crude prices. The euro rose to $1.4476 on Tuesday from $1.4378 late Monday. "They (oil prices) have made slight gains in this morning's trading thanks to the weaker U.S. dollar and more buoyant equity markets," analysts at Commerzbank in Frankfurt said. "However, given the small trading volume, the latest price movements do not say much." Investors will also be closely monitoring U.S. consumer confidence figures later as well as data on U.S. stockpiles of crude and refined products. and crude A draw of 2.3 million barrels in crude oil stocks and a rise of 800,000 barrels in gasoline stocks is anticipated for the week ending July 22, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday. In other Nymex trading in August contracts, heating oil gained 1.28 cents to $3.1206 a gallon while gasoline rose 1.2 cents at $3.1384 a gallon. Natural gas delivery dropped 2.5 cents at $4.361 per 1,000 cubic feet.

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