Oil mixed as traders eye US debt standoff

Oil was mixed in Asian trade today, with investor sentiment muted over the US political standoff on competing plans to lift the country's borrowing cap.

New York's main contract, light sweet crude for September delivery, advanced 15 cents to $99.35 a barrel and Brent North Sea crude for September delivery eased 29 cents to $117.65.

"Investors [are] keeping to the sidelines as Washington debates the debt ceiling," analysts from Phillip Futures said in a commentary.

President Barack Obama and the US Treasury have said Congress must raise the government's $14.29 trillion debt ceiling by August 2 to prevent a default which would have repercussions on the global economy.

But Democrats and Republicans remained deadlocked amid bitter disagreements over tax increases and spending cuts.

The prospect of the world's biggest economic engine running out of cash to pay its bills come August 2 has sent stocks sliding, as the International Monetary Fund warned of a "severe shock" to the world economy without a breakthrough.

Obama appealed to Americans yesterday to press Republicans to compromise on a debt deal, warning in a primetime televised speech that a default would risk "a deep economic crisis"

Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally. However, it can only do so through August 2.

At that point, US leaders will face an agonizing choice about cutting an estimated 40 cents of every dollar in spending and defaulting either on debt payments or on other obligations like government health or retirement benefits.