LONDON: Crude oil slipped to a six-week low of almost $110 a barrel on Friday, weighed down by growth worries as political gridlock brought the prospect of massive US government spending cuts.
The world's biggest economy hurtled towards automatic spending cuts of $85 billion that start on Friday as the White House and the
Republicans failed to agree on an alternative deficit-reduction plan.
The International Monetary Fund (IMF) has warned the cutbacks could knock at least 0.5 percentage point off US economic growth this year and slow the global economy.
In China, domestic and foreign demand slackened as the official Purchasing Managers' Index (PMI) missed expectations easing to 50.1, its lowest reading since September 2012, the government said on Friday.
Brent crude for April delivery fell $1.32 to a low of $110.06 per barrel, its weakest since Jan. 17, before recovering slightly to around $110.20 by 1020 GMT. For the week, the contract is down more than 3 percent, its third consecutive weekly loss.
US oil fell to $91.10, down 95 cents. The contract has lost more than 2 percent for the week.
Some analysts expected oil to fall further on Friday and into next week as the market prices in the political stalemate in the United States.
"It is extremely polarised in US politics at the moment so I wouldn't be too optimistic that there would be a quick solution," said Filip Petersson, commodity strategist at SEB in Sweden.
The US economy grew by just 0.1 percent in the fourth quarter, its slowest pace since the first quarter of 2011, as the military slashed spending and companies restocked their shelves less aggressively.
The Chinese PMI index nevertheless signalled that a mild economic recovery is still taking hold.
"The problem at the moment, is that while we are seeing some signs of the economy clawing its way out of the basement, this is still not translating into demand for oil, whether in China or the US," said Carl Larry, president of Houston-based Oil Outlooks and Opinions.
"It is frustrating for all of us trading the market, and that is just going to weigh on prices in the short term at least," said Larry.
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