Oil prices fell to near $93 a barrel Wednesday as investor pessimism about the U.S. economy dragged down global markets. By early afternoon in Europe, benchmark oil for September delivery was down 48 cents to $93.31 a barrel in electronic trading on the New York Mercantile Exchange. Crude lost $1.10 to settle at $93.79 on Tuesday. In London, Brent crude was down 68 cents at $115.78 a barrel on the ICE Futures exchange. Oil prices have dropped from near $100 two weeks ago as signs of weak U.S. economic growth battered investor confidence. On Tuesday, the Commerce Department said consumer spending fell in June for the first time in nearly two years. Meanwhile, MasterCard SpendingPulse's weekly survey of gas stations across the U.S. showed that drivers bought less gas for the 19th consecutive week. Oil traders often look to stock markets as a barometer of overall investor sentiment, and the Dow Jones industrial average fell 2.2 percent Tuesday. Most Asian and European stock markets dropped Wednesday. Markets fell despite a last-minute agreement among U.S. lawmakers to raise the country's debt limit and avoid a default. President Barack Obama signed legislation Tuesday that will cut federal spending by $2.1 trillion or more over the next decade. "The U.S. economy looks weak, with recent data and events in the stock market likely to make it seem even weaker," energy consultant Cameron Hanover said in a report. "The economy is sinking quickly and history might suggest that a recession is a difficult time for austerity." A report showed U.S. crude and oil products supplies were mixed. The American Petroleum Institute said late Tuesday that crude inventories fell 3.3 million barrels last week while analysts surveyed by Platts, the energy information unit of McGraw-Hill Cos., had predicted a rise of 2.0 million barrels. However, inventories of gasoline rose 2.6 million barrels last week while distillates added 1.4 million barrels, the API said. The Energy Department's Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday. "It will be interesting to see whether there has been another drop in strategic oil reserves, which could be reflected in a rise in commercial oil stocks," said a report from Commerzbank in Frankfurt. "This would keep the pressure on the price of oil in the current market climate and help to widen the price gap further between Brent" and the Nymex contract. The U.S. will release a total of 30 million barrels from the strategic reserve as part of the 60-million barrel release announced by the International Energy Agency in June to help cover potential shortfalls in global markets resulting from the absence of Libyan oil. A weaker dollar helped keep a floor under oil prices by making crude cheaper for investors holding other currencies. On Wednesday, the euro was up to $1.4305 from $1.4201 on Tuesday. In other Nymex trading, heating oil fell 0.93 cent to $3.0823 a gallon while gasoline dropped 3.31 cents to $3.0042 a gallon. Natural gas futures were unchanged at $4.155 per 1,000 cubic feet. ___ Alex Kennedy in Singapore contributed to this report.
