Oil Prices Drop As Fiscal Cliff Nears
Oil prices slipped slightly Friday as traders eyed an 11th-hour “fiscal cliff” meeting at the White House ahead of a New Year’s Eve deadline.
New York’s main contract, West Texas Intermediate light sweet crude for February delivery, edged seven cents lower to settle at $90.80 a barrel.
Brent North Sea crude for February delivery dipped 18 cents a barrel in London trade down to $110.62.
After opening in positive territory in New York trade, prices turned lower following a weekly US Energy Department report that said the country’s crude supplies fell by 600,000 barrels in the week ended December 21 — less than analysts had expected.
But markets seemed largely focused on a White House gathering between President Barack Obama and senior lawmakers aimed at preventing the United States from going over the so-called fiscal cliff, a mix of steep increases and budget cuts due to kick in Tuesday.
Experts warn that failure to reach a deal by the end of the year could take the US economy back into recession. And that could deal a blow to energy demands for the world’s biggest consumer of crude.
President Barack Obama wants taxes on American families earning more than $250,000 a year to go up but to spare the middle class. Republicans, however, want to extend George W. Bush-era tax cuts due to expire for everyone.
Going into the talks, neither the White House nor Republicans showed any sign of shifting from their entrenched positions, in a crisis that threatens to reverse the fragile US recovery, rattle financial markets and cause global economic shockwaves.
With the clock ticking, traders welcomed the meeting.
“They are trying to at least come up with something before the year comes to an end, so Obama shortening his holiday and coming back… I think that is a plus point,” said IG trading group analyst Yang Weiming.
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