By V. Phani Kumar, MarketWatch
NEW YORK (MarketWatch) — Oil futures dropped on Friday as concerns over the U.S. budget situation escalated after House Republicans abruptly canceled a vote on a tax bill.
Crude oil for February delivery CLG3 -1.08% fell $1.10, or 1.2%, to $89.03 a barrel in electronic trading.
The contract had settled 15 cents higher Thursday.
But futures dropped sharply after House Republicans canceled a planned vote on a bill linked to the fiscal-cliff talks, saying there wasn’t sufficient support for the measure. Read: House Republicans cancel Paln B tax vote.
“With time running out, we see a rising chance that negotiations will continue on into January, with an eventual fix made retroactive to the start of the year,” said Tim Evans, an analyst at Citi Futures. Oil futures, however, were still on course for gains of more than 2.6% this week.
A sharp fall in U.S. equity futures reflected market concerns about the latest developments, with Dow Jones Industrial Average DJIA +0.45% futures losing nearly 165 points, or 1.2%.
The ICE dollar index DXY +0.19% , which measures the greenback’s performance against a basket of six other major currencies, rose to 79.396, up from 79.239 in North America late Thursday.
Other products in the energy complex were also dragged lower on fiscal-cliff worries. January gasoline futures RBF3 -0.45% slipped 1 cent to $2.74 a gallon.
January heating oil HOF3 -0.54% dropped 2 cents to $3.04 a gallon, while January natural gas NGF13 +0.69% gained 2 cents to $3.49 per million British thermal units.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
