By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures alternated between edging higher and inching down Tuesday, as the U.S. debt deal cleared its first and likely biggest legislative hurdle to stave off a default, but a government report showed consumers held on to their wallets in June.
Crude for September delivery CL1U +0.41% added 5 cents to $94.94 a barrel on the New York Mercantile Exchange. It traded as high as $95.45 a barrel and as low as $93.75 a barrel.
The Commerce Department said consumer spending fell 0.2% in June, the first decline in nearly two years. Read more about consumer data.
Personal income increased a seasonally adjusted 0.1%, the smallest gain since last November, and the individual savings rate for June jumped to highest level of 2011 — 5.4% of disposable income, up from 5% in May.
The dollar traded higher, keeping the pressure on oil and other commodities. The dollar index, which compares the U.S. unit to a basket of six currencies, traded at 74.367, from 74.254 in late North American trade Monday.
A slump in U.S. manufacturing output had pushed prices lower in the previous session, with oil taking little comfort in the initial agreement reached between U.S. lawmakers Sunday to raise the debt-ceiling. Read more about Monday’s oil moves.
The U.S. House of Representatives voted late Monday to approve a bill that would increase the debt limit. The bill now needs to be approved by the Senate, with a vote scheduled for Tuesday. Read more about U.S. debt deal.
Chung Yang, an oil analyst with Phillip Futures in Singapore said even if the Senate vote passes, concerns about a possible ratings downgrade of U.S. debt are also influencing oil trading.
“Crude prices are likely to be boosted if the Senate vote [is passed] because there is optimism that the U.S. is not going to default. At the same time, we closely monitor what is going to happen if the ratings agencies are going to downgrade the U.S. debt rating,” he said.
Analysts at Barclays Capital said that while the prospects for positive outcomes on the U.S. and European sovereign-debt crises are positive for oil prices, they also “suspect that sovereign-debt issues have not disappeared as a significant factor for the quarter as a whole, although some of the immediate dampening force on prices has lessened.”
Inventory watch
Later Tuesday, the American Petroleum Institute is due to release its weekly inventory report, ahead of the more closely watched U.S. Energy Information Administration data on Wednesday.
Analysts polled by Platts expected a rise in crude stocks of more than 2 million barrels for the week ended July 29. Gasoline inventories are expected to show a build of 350,000 barrels.
“If the inventories are higher than expected, we could see oil prices go lower,” Chung Yang said.
