Crude for September delivery (NMN:CL1U) lost 60 cents, or 0.6%, to $96.82 a barrel on the New York Mercantile Exchange during Asian trading hours. MarketWatch
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. MarketWatch
"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. MarketWatch
"Eventually, that drives lower economic activity, which impacts oil demand in the short term," Esho said. MarketWatch
Meanwhile, inventories from U.S. strategic stockpiles fell 2.3 million barrels, marking the first draw from the SPR since the International Energy Agency's June announcement that members would tap energy reserves. The U.S. government is releasing 30 million barrels of oil from reserves. WSJ
The IEA hopes the release will ease oil prices and make up for the loss of Libyan crude exports. Although oil prices have already returned to pre-announcement levels, some analysts have said it is too early to judge whether the release is a success since the oil is just starting to hit the market. WSJ
Commercial crude stockpiles had fallen for seven straight weeks prior to the week that ended July 22, as refiners ramped up operations to accommodate higher gasoline demand during the summer driving season. Last week's sudden increase in stockpiles could signal that demand is tapering off. WSJ
Gasoline inventories rose one million barrels last week, the EIA said, while refineries cut their operations by two percentage points to 88.3% of capacity. WSJ
Analysts surveyed by Dow Jones Newswires had expected gasoline stocks to rise 400,000 barrels and refiner to leave runs unchanged at 90.3% of capacity. WSJ
Oil in New York also declined as a stalemate over the U.S. debt ceiling pushed the government closer to default. BlackRock Inc., Loomis Sayles & Co. and Franklin Templeton Investments said the country faces losing its top-level debt rating as officials struggle to raise the $14.3 trillion borrowing limit. Bloomberg
House Speaker John Boehner revised his plan to raise the debt ceiling as he gained support among fellow Republicans for a proposal which all 51 Senate Democrats and two independents pledged to oppose. Bloomberg
