Bangkok - Worries about the US economy following the release of a disappointing manufacturing report sent oil prices lower on Tuesday.
Benchmark crude for January delivery was down 27 cents to $88.82 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract finished up 18 cents at $89.09 a barrel on the Nymex on Monday.
Manufacturing in the US shrank in November to its weakest level since July 2009, a trade group said on Monday, because companies are worried about the “fiscal cliff” - sharp tax increases and spending cuts that take effect in 2013 unless US political leaders strike a budget deal before then.
Flaring tensions in the Middle East, including Egypt's widening political crisis and reports that Syria may be readying its chemical and biological weapons against rebels, kept prices from falling more.
There was no immediate threat to oil supplies, but there are persistent worries that fighting could eventually spread to a neighboring oil producer.
“Markets have to factor in the risk. They can't ignore at least the possibility of that sort of thing happening,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Brent crude, which is used to price international varieties of oil, fell 34 cents to $110.58 per barrel on the ICE Futures Exchange in London.
Other energy futures on the New York Mercantile Exchange:
- Heating oil fell 0.9 cent to $3.047 a gallon
- Natural gas was unchanged at $3.591 per 1,000 cubic feet
- Wholesale gasoline fell 0.9 cent to $2.717 a gallon. - Sapa-AP