Crude oil futures prices added to earlier losses Friday, dropping below $96 a barrel, after news that the US economy grew at a slower-than-expected rate in the second quarter. The market already had been unnerved by a continued standoff in efforts to reach agreement on raising the US debt ceiling ahead of a fast approaching Aug. 2 deadline. "All eyes will be on Washington over the next 72 hours," said Edward Meir, senior commodity analyst at MF Global. Oil fell Friday following weak US ecomomic data, and as investors and traders awaited a resolution to the debt situation in the United States, which is still deadlocked ahead of the Aug. 2 deadline to raise the US debt ceiling. Oil fell nearly 2 percent Friday as investors grew uneasy about the US economy's ability to grow significantly and the Congress' ability to act decisively to prevent a default on the nation's debt. Benchmark West Texas Intermediate crude for September delivery dropped $1.74 to settle at $95.70 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 62 cents to settle at $116.74 per barrel on the ICE Futures exchange. The US government reported that second-quarter gross domestic product (GDP) grew only 1.3 percent, far below economists' expectations. It also slashed its estimate of first-quarter GDP growth to just 0.4 percent from its initial estimate of 1.9 percent, indicating that the economic recovery nearly stalled in the beginning of the year. "The inflation and government components were highly negative," said John Kilduff, a partner at Again Capital in New York. "This diminishes the economic outlook and will weigh on the demand outlook for energy and prices." Chicago PMI data, which measures business activity in the US Midwest, was also weak, missing consensus forecasts . Tom Bentz, director at BNP Commodity Futures in New York, added that markets had been under pressure for the last few days as the US debt talks stall. He described the market as "technically weak" and said the GDP figures were "more bad news". Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., said the GDP report is "an additional dose of disappointment" for oil prices and sees potential for a near-term run toward $94 a barrel. Traders were keeping close watch on Tropical Storm Don which is expected to make a rainy landfall in the Texas refining region late Friday or early Saturday.
