By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Benchmark U.S. oil futures on Monday slightly extended their losses in electronic trade but with markets quiet ahead of Christmas holidays.
West Texas Intermediate crude oil for February delivery CLG3 -0.09% slipped 14 cents, or 0.2%, to $88.52 a barrel during Asian trading hours, adding to a 1.6% drop in Friday’s regular New York Mercantile Exchange session.
Friday’s losses for oil came after a botched attempt by House Republicans to pass a “Plan B” bill for averting fiscal-cliff tax hikes. The failed effort appeared to lower the prospects for a bipartisan deal to protect the U.S. economy from the austerity measures slated to take effect at the start of the year. Read: Oil drops below $89, but notches weekly win
On Saturday, the top Republican negotiator on the fiscal cliff, House Speaker John Boehner, said he’s ready to return to talks with the White House. Read: Boehner holds out hope for fiscal cliff deal
However, the markets seemed to take little cheer from the current situation on the fiscal cliff, as U.S. stock-index futures traded lower, with Dow Jones Industrial Average futures down 0.4%, and those for the S&P 500 lower by 0.5%.
Subject of discussion
The fiscal cliff has become a central focus for investors in a wide variety of assets, including oil futures, Citi Futures analysts wrote Friday that any solution to the cliff is unlikely to affect the actual supply-and-demand dynamics in the U.S. energy market.
“We don’t think a fiscal deal would put physical petroleum demand on a much different path, [and] the price reaction has far more to do with investor appetite for risk than actual oil consumption in our view,” they wrote.
A slightly stronger U.S. dollar Monday also added pressure to oil, with the ICE dollar index DXY +0.04% rising to 79.601 from its 79.575 level late Friday. Appreciation in the U.S. currency tends to make dollar-denominated more expensive and therefore less attractive to holders of other currencies.
Natural-gas futures also moved lower Monday, as January natural gas NGF13 -0.93% eased 3 cents, or 0.8%, to $3.42 per million British thermal units.
Other energy futures saw less movement, as January gasoline RBF3 -0.07% sat little changed at $2.74 a gallon and January heating oil HOF3 +0.04% traded flat at $3.02 a gallon
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
