Oil prices fell below $99 a barrel on Monday in Asia amid investor concern that the lack of an agreement among US lawmakers to raise the country's debt limit could trigger a default and damage the global economy.
Benchmark oil for September delivery was down 95 cents to $98.92 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 74 cents to settle at $99.87 on Friday.
In London, Brent crude slid 68 cents to $117.99 per barrel on the ICE Futures exchange.
Talks stalled during the weekend as an Aug. 2 deadline looms for Congress to raise the government's $14.3 trillion debt limit. Without action by that date, the Treasury will be unable to pay all its bills, which could lead to a debt default and undermine the global economy.
Republican and Democratic leaders plan to present government spending and debt proposals later Monday.
"We believe that a last-minute stopgap deal will be reached, averting worst-case outcomes," Bank of America Merrill Lynch said in a report. "But it will fail to provide a credible long-term fiscal solution or lift rating agency concerns."
Bank of America said rating agencies will likely cut the US credit rating to AA from AAA by the end of the year.
In other Nymex trading in September contracts, heating oil rose 1.7 cents to $3.13 a gallon while gasoline gained 2.1 cents at $3.08 a gallon. Natural gas futures for August delivery advanced 1.1 cents at $4.41 per 1,000 cubic feet.