FX:Crude oil futures edge lower with fiscal cliff in focus
Forexpros - Crude oil futures edged lower during European morning hours on Tuesday, as a lack of progress in negotiations for a deal to avoid the U.S. fiscal cliff before a January deadline continued to weigh on appetite for riskier assets.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD88.88 a barrel during European morning trade, down 0.25% on the day.
New York-traded oil prices traded in a range between USD88.53 a barrel, the daily low and a session high of USD89.08 a barrel.
New York-traded oil prices rallied to a six-week high of USD90.30 a barrel on Monday, before trimming gains to end the session little changed after the Institute for Supply Management said in a report that its index of U.S. purchasing managers unexpectedly contracted in November.
The ISM index fell 2.2 points to 49.5, the lowest reading since July 2009, underlining concerns over the U.S. economic outlook.
Investors were also worried about 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, unless a divided Congress and the White House can work out a compromise in the four weeks left before the deadline.
There are fears that U.S. lawmakers will repeat the same political divisiveness that led Standard & Poor's to downgrade the U.S.’s AAA rating in August 2011 and tip the country back into a recession.
Oil traders were also looking ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 400,000 barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Meanwhile, in the euro zone, finance ministers from the European Union were to hold talks in Brussels later Tuesday.
On Monday, Greece launched a scheme to buy back its debt from private investors, as part of an agreement to unlock a new bailout package worth EUR44 billion.
In addition, Spanish bond yields turned lower after Madrid formally requested a bailout to recapitalize its banking sector.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery eased down 0.15% to trade at USD110.77 a barrel, with the spread between the Brent and crude contracts standing at USD21.89 a barrel.
