Oil prices dipped in heavy trading on Tuesday, weighed down by German economic data and concerns about the brewing fight over the U.S. debt ceiling stoked concerns about fuel demand.
Crude prices were weighed down early after data showed the German economy contracted by 0.5 percent in the fourth quarter, more than had been expected. Oil markets have been weighed down by ongoing worries about the U.S. and euro zone economies over the past year, as fuel demand continues to struggle.
Pressure also came after comments from the debate over the U.S. debt limit, with traders eyeing comments from Federal Reserve Chairman Ben Bernanke on Monday. Bernanke urged U.S. lawmakers to lift the country’s ceiling to avoid a potentially disastrous default.
“I think the warnings by the Fed Chairman about the debt ceiling seems to have taken the wind out of yesterday’s strong close,” said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut, referring to gains seen in Brent and U.S. crude on Monday.
“You also had contracting German GDP which also throws a little cold water on the idea the economy is improving nicely.”