Oil prices end year with losses
Crude oil prices fell at the end of the year as traders’ hoped of a last-minute compromise deal between US politicians to avert the “fiscal cliff” faded, analysts said.
New York’s main contract, light sweet crude for delivery in February, shed 28 cent to $90.52 a barrel.
Brent North Sea crude for February slipped 73 cents to $109.89 a barrel in London morning trade.
The political deadlock preventing a bipartisan deal hours before the fiscal cliff of sharp tax hikes and spending cuts was due to kick in was depressing markets, said analyst Yang Weiming.
“All the news is talking about the stalemate on the fiscal cliff discussion... expectations are not so high on a grand resolution,” the premium client manager for IG Markets Singapore said.
Meanwhile looking ahead, an already predicted drop in oil demand growth this year risks weighing on high crude prices despite Middle East unrest.
Benchmark Brent crude oil futures have traded around $110 a barrel for the past two months, benefiting major crude producers like Saudi Arabia and Iran while putting a strain on main consumers the United States and China.
Despite geopolitical tensions across the oil-rich Middle East, amid violence in Syria, recent Israel-Gaza unrest and a Western ban on Iranian crude exports, analysts said prices could drop this year should a world economic recovery falter.
Brent prices hit a 2012-high of $128.40 a barrel on March 1, before slumping in late June to $88.49 – its lowest point of the year.
Prices had spiked in March to a near four-year high on escalating tensions over Iran’s alleged nuclear weapons programme, the eurozone debt crisis and otherwise positive economic data, according to analysts.
Crude futures meanwhile slumped in June to 18-month lows owing to weak demand expectations.