London - World oil prices
advanced on Wednesday as traders welcomed the passing of a US deal to avoid a
"fiscal cliff" of tax rises and huge spending cuts, analysts said.
Brent North Sea
crude for February gained 91 cents to $112.02 a barrel in midday trade in
New York's main
contract, light sweet crude for delivery in February, jumped $1.23 to $93.05
prices started the year on the positive side, posting strong gains following
news that the US Congress managed to finalise a deal about the US fiscal cliff,
avoiding a fiscal disaster," said Sucden analyst Myrto Sokou.
lawmakers approved a deal in order to prevent huge tax increases and spending
cuts worth $600bn that could have possibly driven the US economy into a
recession. The US dollar weakened and provided strong support to most commodity
greenback makes dollar-priced crude cheaper for buyers using stronger
currencies. That tends to stimulate oil demand and support higher price levels.
After bitter New
Year brinksmanship, the US Congress finally backed a deal late Tuesday to avert
a "fiscal cliff" of tax hikes and massive spending cuts that had
threatened to unleash economic calamity.
The House of
Representatives passed a deal between the White House and Republicans to raise
taxes on the rich and put off automatic $109bn budget cuts for two
months, lifting the clouds of immediate crisis.
But more hard
haggling is due in two months' time over further specific budget measures.
The deal's fate
had hung in the balance for hours as House conservatives sought to add spending
reductions to a version passed by the Senate in the early hours of 2013 that
would likely have killed the compromise.
also won support from positive data in Asian powerhouse China, which is the
world's biggest energy consuming nation.
showed that Chinese manufacturing activity expanded in December for a third
straight month, in further evidence the world's number two economy was picking
up after a slowdown.
purchasing managers' index (PMI) stood at 50.6 in December, unchanged from the
previous month. A reading above 50 indicates expansion while anything below
points to contraction.
Chinese PMI data improved market sentiment and brought further support to the
oil market amid signs of improvement in the Chinese economy," added Sokou.