UPDATE 7-Oil slips as German data, US debt ceiling worries weigh

Tue Jan 15, 2013 12:49pm EST

Related Topics

* U.S. retail sales rise more than expected in December

* Crude, gasoline stocks seen rising on higher U.S. imports-poll

* U.N. nuclear inspectors to meet Iranian officials Wednesday

* Coming Up: U.S. oil inventory data at 2130 GMT

NEW YORK, Jan 15 (Reuters) - Oil prices dipped 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.

Losses were extended after the U.S. stock market opened lower amid concerns about how the U.S. debt ceiling crisis, which could lead to a default unless the borrowing limit is increased, will be resolved.

Oil markets have been weighed down by ongoing worries about the U.S. and euro zone economies, as fuel demand continues to struggle.

Federal Reserve Chairman Ben Bernanke urged U.S. lawmakers on Monday to lift the country's borrowing limit to avoid a potentially disastrous debt default, warning that the economy was still at risk from political gridlock over the deficit.

Weekly U.S. oil inventory data due out later Tuesday is expected to show builds in gasoline, distillate and crude inventories, according to a Reuters poll of analysts, which could further pressure prices.

Traders were also eyeing data showing U.S. retail sales rose more than expected in December as Americans shrugged off the threat of higher taxes and bought a range of goods, suggesting momentum in consumer spending as the year ended.

Brent futures for February fell 83 cents to $111.05 per barrel by 12:39 p.m. EDT (1739 GMT). The contract, which expires on Wednesday, settled $1.24 higher in the previous session.

U.S. oil slipped 30 cents to $93.84 a barrel.

Worries about supply disruption from the Middle East have helped counter demand weakness in recent months. A senior U.N. nuclear watchdog official said on Tuesday he was aiming for an agreement with Iran this week on a framework deal enabling his inspectors to investigate suspected nuclear bomb research.

The West has applied the toughest sanctions ever in an attempt to force Tehran to end its nuclear program. Iran, which says it needs the technology to generate electricity, has threatened to block the Strait of Hormuz if it is attacked.

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