FX:Crude oil futures halt 3-day decline on fiscal cliff optimism
Forexpros - Crude oil futures were higher during European morning hours on Thursday, rising for the first time in four days as signs U.S. political leaders may be closing in on a budget deal to avoid the looming "fiscal cliff" boosted appetite for riskier assets.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD86.87 a barrel during European morning trade, up 0.45% on the day.
New York-traded oil prices rose by as much as 0.55% earlier in the day to hit a session high of USD86.94 a barrel.
Markets participants continued to monitor developments surrounding the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
House of Representatives Speaker John Boehner said Wednesday that he remained hopeful Republicans could forge an agreement with the White House to avert the budget crisis.
President Barack Obama later said he believed a "framework" for an agreement can be reached before Christmas.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the five weeks left before the January 1 deadline.
The optimistic comments prompted investors to shun safe haven assets, such as the U.S. dollar and flock to riskier assets, like stocks and commodities.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.12% to trade at 80.25.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Oil found further support after weekly data from the U.S. Energy Department on Wednesday showed that crude oil supplies fell unexpectedly by 0.34 million barrels last week, compared to expectations for an increase of 0.31 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery eased up 0.1% to trade at USD109.64 a barrel, with the spread between the Brent and crude contracts standing at USD22.77 a barrel.
