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Oil prices slip to near $93 a barrel as Germany slashes 2013 growth forecast to 0.4 per cent


Oil pumps work in the desert oil fields of Sakhir, Bahrain, on Nov. 29, 2012. THE CANADIAN PRESS/AP, Hasan Jamali

Oil prices slipped closer to $93 a barrel Wednesday, as Germany cut its 2013 growth forecast.

By early afternoon in Europe, benchmark oil for February delivery was down 8 cents to $93.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 86 cents to finish at $93.28 a barrel in New York on Tuesday.

The German government cut its 2013 growth expectations to 0.4 per cent from an earlier estimate of 1 per cent on Wednesday, just a day after the announcement that growth in 2012 fell to just 0.7 per cent from 3 per cent in 2011.

Across the Atlantic, however, U.S. industrial production is expected to have risen again in December, taken as a positive sign by analysts of a gradual economic recovery.

"A likely strong reading for US industrial production in December will provide more evidence of U.S. recovery, albeit a gradual one," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.

Oil prices were also seen reflecting caution as another heated fiscal debate began brewing in Washington.

Just weeks after striking a deal to avoid the "fiscal cliff," U.S. lawmakers and President Barack Obama are heading for another showdown over the debt ceiling.

Congress must act to raise the congressionally set $16.4 trillion debt ceiling. If that ceiling is not raised by sometime in February or early March, the government will not be able to pay all its bills.

The Organization of the Petroleum Exporting Countries' latest monthly released Wednesday predicted steadier global demand for oil this year.

"The forecast for world oil demand growth in 2013 remains unchanged at 800,000 barrels a day, in line with the growth seen in the previous year," said OPEC, which has its headquarters in Vienna. "This year, the impact of economic turbulence on oil demand should be considerably milder than in previous years."

OPEC also expects oil demand in the United States to remain at last year's levels in 2013 after two straight years of declines while demand in Europe is seen shrinking further.

Brent crude, used to price international varieties of oil, was up 68 cents to $110.31 per barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

Wholesale gasoline fell 1.11 cents to $2.715 a gallon.

Natural gas lost 3.7 cents to $3.418 per 1,000 cubic feet.

Heating oil added 1.21 cents to $3.0234 a gallon.

___

Pamela Sampson in Bangkok contributed to this report.


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