SINGAPORE: Brent crude slipped towards $111.50 a barrel on Tuesday after ending the previous session more than $1 higher, with the lack of an agreement over the US debt ceiling and a forecast increase in the country's oil inventory weighing on prices.
Federal Reserve Chairman Ben Bernanke on Monday warned the economy was still at risk from political gridlock over the deficit and urged lawmakers to lift the country's borrowing limit to avoid a potentially disastrous default. Investors were keeping a cautious watch on US fiscal woes, and awaited more data from top economies to assess the global growth outlook.
Brent slipped 29 cents to $111.59 a barrel by 0627 GMT. The February contract, which expires on Wednesday, settled $1.24 higher in the previous session, while the contract for March delivery ended $1.11 up.
US oil dropped 34 cents on Tuesday to $93.80 a barrel.
"We have reached one of those levels where the market is taking a pause," said Ric Spooner, chief market analyst at CMC Markets. "There's a lot of work in progress still, and the market will look at more data due over the next few days to grasp the progress of growth in the global economy."
The US Treasury says the country bumped into its borrowing limit on Dec. 31, and it is now employing special measures to enable the government to meet its financial obligations.
US leaders did agree at the beginning of January to extend tax cuts for all American families earning less than $450,000 a year to avoid a portion of the "fiscal cliff", but lawmakers must still navigate the debt limit and thrash out a deal over drastic automatic spending cuts that were postponed until March 1.
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