--Oil prices fall amidst concerns over the state of the global economy
--WTI hovers above a five-week low
--Market shrugs off US debt ceiling agreement, focus on impact on economy
--Euro-zone contagion fears return
--Investors eye US crude oil inventory data due at 1430 GMT
By Sarah Kent
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Crude futures were lower Wednesday as renewed concerns over the health of the global economy sent investors scrambling out of risky assets such as oil.
At 0959 GMT, the front-month September Brent contract on London's ICE futures exchange was 75 cents, or 0.6%, lower at $115.71 a barrel. The front-month September contract on the New York Mercantile Exchange was trading down 49 cents, or 0.5%, at $93.30 per barrel, after falling to its lowest level in five weeks earlier in the day.
The market largely shrugged off the last minute agreement reached by lawmakers in the U.S. to raise the country's debt ceiling, focusing instead on the potential for spending cuts to slow economic growth.
Numbers out of the U.S. are already very weak, and people are now worried that the austerity measures in the U.S. debt agreement will worsen the country's growth outlook, said Torbjorn Kjus, oil market analyst at DnB NOR.
Meanwhile, concerns over the euro-zone economy have returned, after Italian borrowing costs rose to record highs earlier in the day, while Spanish bond yields also rose to dangerously high levels.
"Contagion is no longer something to fear--it has arrived," said oil brokerage PVM in a note.
Later in the day, investor attention is likely to turn to crude oil inventory data from the U.S. Department of Energy, due at 1430 GMT. This weekly report is closely watched as an indication of the health of demand in the world's largest oil consumer.
The data is expected to show that crude oil stockpiles rose by 1.1 million barrels last week, according to a survey of analysts by Dow Jones Newswires. Gasoline stocks are expected to rise by 100,000 barrels, while stocks of distillates, which include diesel fuel and heating oil, are expected to rise by 1.7 million barrels.
If these projections are borne out, prices could decline further and the price gap between Brent and WTI should widen further, said Commerzbank in a note. If Brent falls below $115 a barrel it could quickly drop back to $110, while WTI could fall below $90 a barrel, it added.
At 0959 GMT, the ICE's gasoil contract for August delivery was down $3, or 0.3%, at $964.50 per metric ton, while Nymex gasoline for September delivery was 344 points, or 1.1%, higher at $3.0029 per gallon.
-By Sarah Kent, Dow Jones Newswires; 4420-7842-9376; sarah.kent@dowjones.com
