By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Benchmark crude-oil futures extended declines in electronic trading Thursday, as the unresolved U.S. debt-ceiling debate chipped away at investor confidence and dampened demand.
Crude for September delivery CL1U -0.30% lost 60 cents, or 0.6%, to $96.82 a barrel on the New York Mercantile Exchange during Asian trading hours.
It put oil on track for a second day of falls, as the trio of U.S. debt tensions, weaker-than-expected economic data and a rise in weekly inventories capped prices. Read more on Wednesday’s oil moves.
Lawmakers remained locked over the path to raise the debt-ceiling, as the Aug. 2. deadline required for action to avoid a possible default drew closer. Read more on politicians’ plans to raise the U.S. debt-ceiling.
“The U.S. debt issues are weighing on confidence. The political situation is really overshadowing [market fundamentals]. It has a spillover impact on sentiment, and the longer it goes on, the worse it is for confidence.” said City Index chief market analyst Peter Esho.
“Eventually, that drives lower economic activity, which impacts oil demand in the short term,” Esho said.
A clearer picture on the health of the U.S. economy will be delivered Thursday, with jobless claims and home-sales data due to be released.
A stronger dollar also weighed on crude. The dollar index DXY +0.02% , which compares the U.S. unit to a basket of six other currencies, traded at 74.176 midday Thursday in Asia, up from 74.138 late Wednesday.
The greenback tends to trade inversely to dollar-price commodities, such as crude oil.
Virginia Harrison is a MarketWatch reporter based in Sydney.
