Oil prices retreated Tuesday after unimpressive economic data out of Germany and the US raised questions about the strength of petroleum demand.
Prices of US benchmark West Texas Intermediate futures settled at US$93.28 a barrel, down 86 cents. European benchmark Brent crude futures settled at US$110.30 a barrel, down US$1.58.
German gross domestic product shrank by about 0.5 pe rcent in the fourth quarter of last year, bringing full-year GDP growth to just 0.7 per cent, the federal statistics office Destatis calculated in preliminary data.
In 2010 and 2011, the German economy had expanded by 4.2 per cent and 3.0 per cent, respectively.
The results are a troubling indicator for Europe because "Germany is really the strong man of Europe in terms of economy," said James Williams of WTRG Economics.
Meanwhile, economic indicators out of the US were also middling.
On the more positive side, US retail sales grew in the month of December by 0.5 per cent from November, above the analyst projection of 0.2 per cent.
However, IHS Global Insight economist Chris Christopher noted that the data showed that holiday retail sales increased by 2.7 per cent in 2012, well below the 5.5 per cent notched in 2011 and the 5.6 per cent in 2010.
In addition, the New York Empire State Manufacturing Survey said the business-conditions index fell to -7.78, well below the average estimate of -2.0. A reading below zero suggests contraction.
"The data was mostly poor this morning," said John Kilduff, an oil trader with Again Capital.
Concerns about the US also centre on the fact that talks between the White House and congressional Republicans remained tense on raising the debt ceiling. President Barack Obama Monday warned Republicans against using the debt ceiling as a "bargaining chip" in budget negotiations.
Republicans reacted swiftly, essentially ignoring Obama's demand to decouple the spending debate from the debt ceiling and giving every indication that the face-off will continue.