Oil prices drop as US talks stall
The price of oil fell Thursday as fears rose that the US could head over the “fiscal cliff” if political leaders there fail to reach a budget deal to cut the government deficit before the end of the year.
Benchmark crude for February delivery lost 45 cents at midday Bangkok time to $89.53 per barrel in electronic trading on the New York Mercantile Exchange.
The contract jumped $1.58, or about 1.8 percent, to finish at $89.51 per barrel in New York on Wednesday.
That was the biggest one-day price rise in a month.
Negotiations between President Barack Obama and Republican House Speaker John Boehner hit a snag Wednesday. The White House threatened to veto Boehner's alternative plan for averting automatic tax increases and government spending cuts that are set to take effect Jan. 1 if no deal is reached.
Without a deal, the hundreds of billions of dollars in spending cuts and tax hikes that will take effect could throw the US economy back into recession, analysts have said. Such a prospect would likely mean decreasing energy demand.
In other energy futures trading, Brent crude, used to price international varieties of oil, fell 35 cents to $110.01 per barrel in London.
On the New York Mercantile Exchange:
- Heating oil lost 0.1 cent to $3.02 a gallon.
- Natural gas rose 3 cents to $3.347 per 1,000 cubic feet.
- Wholesale gasoline fell marginally to $2.7327 a gallon. - Sapa-AP