Oil moved in a narrow range Tuesday as lawmakers continued to talk about raising the nation's debt limit and the dollar weakened on uncertainty about the economy.
While congressional leaders bicker over spending and raising the borrowing limit ahead of an Aug. 2 deadline, oil traders are in a wait-and-see mode. They are taking their cues for buying and selling contracts from other financial markets instead of supply-and-demand basics.
The dollar fell sharply Tuesday, which typically benefits oil. Crude is priced in dollars so a weaker dollar makes oil more of a bargain for traders who use other currencies.
Oil rose slightly, but gains were held in check by drooping stock markets and a government report that showed the housing market remained weak. New homes sales fell 1 percent in June.
U.S. consumer confidence improved a little in July but remained weak overall, according to a monthly survey by The Conference Board.
Benchmark West Texas Intermediate crude for September delivery rose 51 cents to $99.71 in midday trading on the New York Mercantile Exchange. In London, Brent crude gained 30 cents at $118.24 per barrel on the ICE Futures exchange.
The uncertainty about what will happen with the U.S. debt ceiling and a possible default is making "some of the traders seesaw back and forth," said Michael Lynch, president of Strategic Energy & Economic Research.
He thinks that oil prices will drift in a narrow range, perhaps fall $1 a day until there is a resolution about the debt limit.
When a deal is completed, traders will pay more attention to supplies, demand and expectations for the economy through the rest of the year, he said.
Energy analyst Jim Ritterbusch also speculated that oil will climb above $100 a barrel when an agreement is reached.
In other Nymex contracts for August, heating oil rose a penny to $3.1345 a gallon, gasoline gained 2 cents at $3.0995 a gallon and natural gas fell 6 cents to $4.293 per 1,000 cubic feet.