By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Benchmark U.S. crude-oil futures slipped in electronic trade Friday, giving back a bit of their gains from the previous day, with the so-called fiscal cliff remaining a focus for the market.
Crude for January delivery CLF3 -0.22% fell 16 cents, or 0.18%, to $87.91 a barrel, paring Thursday’s 1.8% rally Thursday on the New York Mercantile Exchange.
Oil’s earlier advance was smoothed by optimism over a potential resolution to the fiscal cliff — the automatic kick-in of tax increases and spending cuts beginning in January. Read: Oil ends loss streak on cliff talk, economic data
However, a deal on the U.S. budget deficit remained far from certain, with GFT Markets technical analyst Fawad Razaqzada noting that crude futures “came off their highs after House Speaker John Boehner said no major progress was made in budget talks.” Read: Republicans say no to Obama’s opening ‘cliff’ bid
Citi Futures analysts said that while a resolution of the U.S. fiscal cliff, a calming in Europe’s debt crisis, or fresh tensions in the Middle East could all push prices higher, such scenarios “would just be creating a temporary bubble in valuation.”
“In the absence of shift in the fundamentals, we see the crude-oil market in surplus,” they said, citing a global supply-demand surplus of 700,000 barrels per day for the fourth quarter, and noting that the four-week average for U.S. production is now up almost 15% from a year earlier.
Elsewhere in the energy complex, December gasoline RBZ2 -0.38% lost a penny, or 0.5%, to $2.77 a gallon, while December heating oil HOZ2 -0.19% was little changed at $3.04 a gallon.
Gasoline had rallied 1.9% on Thursday, and heating oil had climbed 1.1%
January natural gas NGF13 -0.47% was off a cent at $3.63 per million British thermal units after the contract tumbled 4% Thursday in New York after data showing an unexpected build-up in natural-gas stocks.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
