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Crude oil falls after mixed U.S. data, debt ceiling in focus

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Shutterstock photo - Crude oil futures were lower during U.S. morning hours on Tuesday, after U.S. data painted a mixed picture of the economy, while concerns over further budgetary battles facing the U.S. came into focus.

On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD93.91 a barrel during U.S. morning trade, down 0.25% on the day.

New York-traded oil prices fell by as much as 0.6% earlier in the day to hit a session low of USD93.58 a barrel. Oil futures touched USD94.67 a barrel on January 10, the strongest level since September 19.

The Commerce Department said in a report earlier that U.S. retail sales rose 0.5% in December, beating expectations for a 0.2% gain, while core retail sales, which exclude automobile sales, rose 0.3% last month.

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.

Another report showed that the Empire State manufacturing index declined to minus 7.8 in January from a reading of minus 7.3 in December. Analysts had expected the index to improve to 2.0.

Oil traders often use manufacturing numbers as indicators for future fuel demand growth.

A separate report showed that producer prices in the U.S. fell 0.2% last month, compared to expectations for a 0.1% decline.

Focus was expected to remain on the U.S. economy, after Federal Reserve chairman Ben Bernanke said Monday that he was still unsatisfied with the economy's progress, despite some recent signs of improvement.

Meanwhile, investors were jittery with negotiations on raising the debt ceiling still to come in February.

Ratings agency Fitch warned earlier that the U.S.'s coveted AAA-credit rating would be at risk if Washington politicians cannot reach an agreement on its debt ceiling.

Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner also urged policymakers to act swiftly in order to prevent a potential debt default.

Oil traders looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles rose by 2 million barrels.

The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.

Market players were also looking ahead to key Chinese economic data later in the week. The Asian nation is slated to release data on fourth quarter gross domestic product on Friday, along with reports on industrial production and retail sales.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery shed 0.45% to trade at USD111.35 a barrel, with the spread between the Brent and crude contracts standing at USD17.44 a barrel. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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