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Oil drops as US 'fiscal cliff' approaches
Source: Agencies |
December 22, 2012, Saturday
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Online Edition
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OIL prices fell as much as US$2 a barrel yesterday as doubts grew about whether political leaders in Washington could reach a deal on the budget before a package of tax hikes and spending cuts automatically kicks in with the new year.
If Republicans and Democrats don't work out a compromise in the next 10 days, the US could go over the so-called "fiscal cliff," a reference to hundreds of billions of dollars in tax increases and government spending cuts that take effect if a budget deal is not reached. Many economists fear that would eventually push the US back into recession, a situation that would likely mean less energy demand.
Benchmark crude for February delivery fell US$1.47 to finish at US$88.66 per barrel in New York, the contract's lowest point in three weeks. It dropped to US$87.96 per barrel at one point yesterday.
Late Thursday House Republicans abruptly put off a vote on an alternative plan offered by House Speaker John Boehner that would prevent scheduled tax increases from taking effect on Jan. 1 on all income under US$1 million. President Barack Obama wants the cutoff point to be US$400,000.
Yesterday both signaled that talks are still open.
Brent crude, used to price international varieties of oil, fell US$1.23 to end at US$108.97 per barrel in London.
In other energy futures trading on the New York Mercantile Exchange:
- Natural gas lost a penny to finish at US$3.45 per 1,000 cubic feet.
- Heating oil fell 4 cents to end at US$3.02 a gallon.
- Wholesale gasoline fell 2 cents to finish at US$2.73 a gallon.
If Republicans and Democrats don't work out a compromise in the next 10 days, the US could go over the so-called "fiscal cliff," a reference to hundreds of billions of dollars in tax increases and government spending cuts that take effect if a budget deal is not reached. Many economists fear that would eventually push the US back into recession, a situation that would likely mean less energy demand.
Benchmark crude for February delivery fell US$1.47 to finish at US$88.66 per barrel in New York, the contract's lowest point in three weeks. It dropped to US$87.96 per barrel at one point yesterday.
Late Thursday House Republicans abruptly put off a vote on an alternative plan offered by House Speaker John Boehner that would prevent scheduled tax increases from taking effect on Jan. 1 on all income under US$1 million. President Barack Obama wants the cutoff point to be US$400,000.
Yesterday both signaled that talks are still open.
Brent crude, used to price international varieties of oil, fell US$1.23 to end at US$108.97 per barrel in London.
In other energy futures trading on the New York Mercantile Exchange:
- Natural gas lost a penny to finish at US$3.45 per 1,000 cubic feet.
- Heating oil fell 4 cents to end at US$3.02 a gallon.
- Wholesale gasoline fell 2 cents to finish at US$2.73 a gallon.
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