UPDATE 5-Oil rises ahaed of U.S. debt talks, EU bank stress test
* Obama gives congressional leaders weekend deadline for deal
* Dollar/euro rangebound ahead of bank stress test in Europe
* Citigroup Q2 earnings beat forecast, U.S. consumer price falls (Update throughout)
By Claire Milhench and Ikuko Kurahone
LONDON, July 15 (Reuters) - Oil edged higher from earlier losses in choppy trading on Friday as the market focus shifted to the potential for a weaker dollar amid concerns about the U.S. budget negotiations to avert a debt default.
U.S. crude CLc1 leading the oil complex, up 92 cents at $96.61 a barrel by 1341 GMT. Brent crude LCOc1 was up 79 cents at $117.05 a barrel.
"The dollar. It is all about the U.S. debt ceiling. If they do not do a deal, then Moody's will downgrade U.S. debt," a New York-based trader said.
President Barack Obama suspended U.S. budget negotiations for the day Friday to give congressional leaders a chance to come up with a "plan of action" on how to unblock talks meant to cut deficits and avert a debt default. The talks may resume over the weekend
Obama, who had vowed to meet top lawmakers every day until a deal is reached to raise the U.S. debt limit, gave top Democrats and Republicans until Saturday morning to reconsider their positions in the high-stakes negotiations.
He will hold a news conference Friday at 11:00 a.m. EDT (1500 GMT).
Earlier this week, Moody's Investors Service warned for potential downgrade of the U.S. debt.
Standard & Poor's chimed in on Friday, warning that there was a one-in-two chance it could cut the prized triple-A rating within the next 90 days if a deal to raise the government's debt ceiling is not struck by the White House and Republicans.
The dollar-euro traded mostly in a range on Friday as investors in Europe awaited the results of stress tests for 90 banks due at 1600 GMT, which could force some to seek state aid. .
LOWER EARLIER IN THE DAY
Earlier on Friday when European traders were a majority of the players in the oil market, the same U.S. debt woe drove oil prices lower, being interpreted as a threat to the global economy. The United States is the world's largest economy and the euro zone has already been hit by spate of downgrades.
"It is overall economic concerns that are driving the oil price this morning," said Eugen Weinberg, a senior commodity analyst at Commerzbank in Frankfurt.
Support to U.S crude also came from Citigroup, which reported a 24 percent jump in its second-quarter profit, beating analysts' expectations.
U.S. consumer prices fell slightly more than expected in June to post their biggest drop in a year on weak gasoline costs, government data showed on Friday, pointing to a cooling in commodity-driven inflation pressures, figures from the U.S. Labor Department showed.
The market is also weighing the possibility of a second round of strategic petroleum reserve releases, after the U.S. was reported to be considering it.
Germany and Italy are likely to oppose a second release a French government source said on Friday.
Analysts such as Commerzbank's Weinberg say the market is well supplied, a view reiterated by Iran's caretaker oil minister, who said there is plenty of oil to satisfy global demand and no need to increase production. (Additional reporting by Alejandro Barbajosa; Editing by Alison Birrane)
- Tweet this
- Share this
- Digg this
Trending On Reuters
Data released on Friday showing a slowdown in India's economy will put the Reserve Bank under renewed pressure to cut interest rates, while Prime Minister Narendra Modi takes his time over reforms needed for a revival. Full Article