Oil price hovers near monthly high of $111

Brent crude edges up as US lawmakers launch talks in bid to halt return to recession
oil, energy, GCC oil, GCC energy, Middle East energy, Middle East oil
By Reuters
Fri 28 Dec 2012 04:10 PM

Brent crude hovered near $111 per barrel on Friday, not far off its highest this month, as US lawmakers launched a last-chance round of budget talks to stop the world's largest oil consumer slipping back into recession.

Brent crude edged 16 cents down to $110.64 per barrel by 3.26pm UAE time, on course to post a weekly climb of about 1.5 percent and a full-year increase of about 3 percent, which would be its smallest gain in four years.

US crude rose 13 cents to $91, set for its first yearly loss in four years.

"We now have to go again into the weekend with the "fiscal cliff" risk, and if it is not solved then crude oil could start 2013 with a correction given that it has for now dissociated itself from equities but without clear new bullish inputs," said Olivier Jakob from Petromatrix consultancy.

"The US fiscal cliff will continue to direct crude prices until it is resolved," said Natalie Rampono, a commodities analyst at ANZ in Melbourne.

US President Barack Obama will meet congressional leaders from both parties at the White House later on Friday to try to revive negotiations to avoid going over the "fiscal cliff" - tax hikes and spending cuts slated to take effect on January 1.

Positive data from the US on Thursday highlighting the momentum building in the economy supported oil prices.

The number of Americans filing new claims for jobless benefits fell to a nearly four and a half year low and new home sales hit their highest level since April 2010.

But capping gains in prices, US consumer confidence fell more than expected in December, dropping to a four-month low, as the fiscal uncertainty pushed back against the recent optimism on the economy.

The American Petroleum Institute said in a report released late on Thursday that US crude inventories fell 1.2 million barrels in the week to December 21, less than the expected drop.

The US Energy Information Administration's oil inventory report is due out later on Friday. The inventory reports were delayed because of Tuesday's Christmas holiday.

Concerns about potential supply disruptions in the Middle East continued to support oil prices and were reinforced after UAE security forces arrested a cell of UAE and Saudi Arabian citizens that the UAE said was planning attacks in both countries and other states.

The international envoy seeking a negotiated solution to Syria's 21-month-old conflict said on Thursday political change was needed to end the violence which has killed 44,000 people.

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Last Updated: Thu 26 Jan 2017 01:27 PM GST

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