All data is delayed
See More

Oil dips on fears of next US budget rows

Jan 04 2013 07:44

Singapore - Oil prices were down in Asian trade on Friday as looming budget battles in the United States weighed on sentiment, analysts said.

New York's main contract, light sweet crude for delivery in February dropped 64 cents to $92.28 a barrel and Brent North Sea crude for February delivery shed 75 cents to $111.39.

Oil prices hit an 11-week high after the US Congress on Wednesday backed an agreement that averted across-the-board tax hikes and automatic spending cuts which, could have tipped the economy into recession.

However, while the tax problem was addressed, another row is expected as a agreement must be struck within two months to deal with billions of dollars of spending cuts as well as to raise the country's debt ceiling.

On Thursday those concerns were compounded by the Fed minutes from last month showing a growing bias towards some policy tightening this year, with some members looking to end the bank's asset purchases during 2013 and others by the end of the year.

"Focus shifted... to the upcoming wrangling US President Barack Obama and Republicans in Congress will face over the budget, which could further stress the world's biggest economy," Phillip Futures said in a market commentary.

Dutch bank ABN Amro said in a report that politics remains a "risk factor" for energy.

"While the aftermath regarding the US fiscal cliff will most likely continue to dominate the news during the coming weeks, other political drivers will be very important for oil prices as well," it said.

"It will be interesting to see whether ... Obama can and will keep his promise to promote industries that are crucial to US economic growth and, in this case, the country's possible energy independence."

The United States is the world's biggest oil consuming nation and its energy consumption patterns can influence global prices.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

commodities  |  markets  |  oil



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


With infrastructure spending having been identified as one of the key focus areas of the National Development Plan, tradesmen will continue to play a critical role in growing the South African economy through their skills..

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

A 30% a month return on investment is:

Previous results · Suggest a vote