FX:Crude holds steady on supply data, U.S. fiscal uncertainty dampens gains
Forexpros - Crude oil futures held steady in Asian trading on Wednesday after industry data revealed U.S. stockpiles dropped unexpectedly last week.
Fiscal uncertainties in the U.S. hampered the commodity's gains, pushing prices in and out of positive territory.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD88.52 a barrel on Wednesday, up 0.02%, off from a session high of USD88.59 and up from an earlier session low of USD88.34.
Industry data released earlier revealed crude inventories fell last week.
The American Petroleum Institute reported earlier that U.S. crude stocks declined by 2.22 million barrels last week, confounding expectations for a gain of 100,000 barrels, which was bullish for crude futures.
Gasoline stocks, however, jumped up 5.71 million barrels, beating out market expectations for a gain of 2.03 million barrels, which dampened gains.
Ongoing tensions in the Middle East pressured prices upward as well, though fiscal uncertainty in the U.S. offset bullish tendencies in the market.
Congressional Republicans have rejected budget proposals championed by the White House.
Both sides of the U.S. political aisle must agree on a fiscal framework for next year, or a series of tax cuts will expire at the same time automatic cuts to government spending kick in, a combination known as a fiscal cliff that could tip the country into recession next year if left unresolved by U.S. policymakers.
Taxes serve as hurdle, with the White House insisting tax rates must rise for wealthy Americans, a measure opposed by Republicans who favor extending tax breaks for everyone but cutting deductions to free up revenue.
President Barack Obama earlier insisted there would be no deal unless Republicans agree to hike tax rates on top U.S. earners
Uncertainty over concerns that both political parties may be unable to strike a deal or will kick the can down the road by punting on deadlines kept crude prices at bay.
Even if U.S. policymakers do avoid the fiscal cliff, a compromise may involve tax and spending reforms that could crimp growth next year, which could cut into demand for fuels and energy.
On the ICE Futures Exchange, Brent oil futures for January delivery were up 0.15% and trading at USD109.89 a barrel, up USD21.37 from its U.S. counterpart.
