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Oil hovers above $98 as US debt deadline looms
Oil hovers above $98 as traders eye looming US debt ceiling deadline
By The Associated Press

SINGAPORE (AP) ' Oil prices hovered above $98 a barrel Thursday in Asia amid a stalemate among U.S. lawmakers over raising the country's debt ceiling.

Benchmark oil for August delivery was down 7 cents to $98.33 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 54 cents to settle at $98.40 on Wednesday.

In London, the September contract for Brent crude rose 20 cents to $118.35 per barrel on the ICE Futures exchange.

President Barack Obama met Tuesday with Democratic and Republican leaders, but so far no deal has been reached about lifting the debt limit and cutting the deficit. Analysts worry that if there is no agreement by the Aug. 2 deadline, the government's inability to borrow money and pay its bills could trigger a recession.

Crude fell from near $115 in May and has traded in the $90s for most of the last two months amid concern global economic growth and oil demand will slow in the second half. Bank of America Merrill Lynch said it expects crude to drop to $88 in the fourth quarter.

"Economic activity in the U.S. and Europe has been slowing down for a number of months, and leading indicators suggest a deceleration in economic growth ahead," the bank said.

In other Nymex trading in September contracts, heating oil fell 0.7 cent to $3.13 a gallon while gasoline dropped 0.8 cent at $3.09 a gallon. Natural gas futures for August delivery advanced 1.0 cent at $4.51 per 1,000 cubic feet.

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