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WTI oil price trading around $99 on US debt default concerns

25-07-2011 6:29 pm

I oil prices open Monday’s trading session hovering around $99 a barrel as the markets ponder over the US debt situation on concerns that the lack of an agreement among lawmakers to raise America’s debt limit could trigger a default in the US, affecting the US dollar in markets and damage the global economy.

Latest WTI Oil Price

US Light crude oil futures for September 2011 delivery was trading at $98.91 a barrel, 08.15 GMT this morning in electronic trading on the NYMEX.

US Debt – Possible Default?

Talks stalled during the weekend as a 2nd August deadline looms for Congress to raise the US 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.

US ICE Dollar Index

The US dollar slid toward a record low against the Swiss franc, boosting the odds of a default as soon as next week.

“US dollar down, Swiss franc higher is the most obvious trade on the back of a disappointment.” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp.

Meanwhile, the ICE US Dollar Index was at 74.220 from 74.242. A weaker US dollar tends to fuel oil price rises as oil becomes cheaper for buyers using other currencies.