Investing.com - Crude oil futures ended Friday’s session sharply lower, as appetite for growth-linked assets weakened amid reduced hopes for a deal to avoid the looming fiscal cliff crisis in the U.S. before the year-end deadline.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February lost 1.35% Friday to settle at USD88.90 a barrel by close of trade.
Despite Friday’s losses, New York-traded oil futures climbed 2.3% on the week.
Prices rallied to a two-month high of USD90.53 a barrel on Thursday, but investors were hesitant to extend the rally amid growing uncertainty over the looming U.S. fiscal cliff, approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
Doubts over whether a deal will be reached ahead of the year-end intensified late Thursday after House Speaker John Boehner pulled his so-called “Plan B” fiscal cliff option, which called for tax increases only on Americans earning USD1 million or more per year, because his Republican colleagues did not support the legislation.
The U.S. House has adjourned for the Christmas holiday, fueling speculation that policymakers will not be able to avert the fiscal cliff. Without a deal, the U.S. could fall back into recession and drag much of the world down with it.
Adding to the gloomy trade environment, Italian Prime Minister Mario Monti tendered his resignation after only 13 months in office, paving the way for a highly uncertain national election in February.
The news prompted investors to shun riskier assets, like stocks and high yielding currencies, and move in to safe-haven assets, such as the U.S. dollar and Treasurys.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rose 0.45% Friday to settle the week at 79.64.
Dollar-denominated oil futures contracts tend to fall when the U.S. dollar gains, as this makes oil more expensive for buyers in other currencies.
On the data front, the University of Michigan's consumer sentiment index slumped unexpectedly to a five-month low in December, possibly due to fears the U.S. will careen over the fiscal cliff.
The index dipped to 72.9 for December from 74.5 the previous month, missing analysts' call for an improvement to 74.7 this month.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for February delivery dropped 1% Friday to settle the week at USD109.10 a barrel.
The London-traded Brent contract added 0.75% over the week, while the spread between the Brent and the crude contracts stood at USD20.20 a barrel.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February lost 1.35% Friday to settle at USD88.90 a barrel by close of trade.
Despite Friday’s losses, New York-traded oil futures climbed 2.3% on the week.
Prices rallied to a two-month high of USD90.53 a barrel on Thursday, but investors were hesitant to extend the rally amid growing uncertainty over the looming U.S. fiscal cliff, approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
Doubts over whether a deal will be reached ahead of the year-end intensified late Thursday after House Speaker John Boehner pulled his so-called “Plan B” fiscal cliff option, which called for tax increases only on Americans earning USD1 million or more per year, because his Republican colleagues did not support the legislation.
The U.S. House has adjourned for the Christmas holiday, fueling speculation that policymakers will not be able to avert the fiscal cliff. Without a deal, the U.S. could fall back into recession and drag much of the world down with it.
Adding to the gloomy trade environment, Italian Prime Minister Mario Monti tendered his resignation after only 13 months in office, paving the way for a highly uncertain national election in February.
The news prompted investors to shun riskier assets, like stocks and high yielding currencies, and move in to safe-haven assets, such as the U.S. dollar and Treasurys.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rose 0.45% Friday to settle the week at 79.64.
Dollar-denominated oil futures contracts tend to fall when the U.S. dollar gains, as this makes oil more expensive for buyers in other currencies.
On the data front, the University of Michigan's consumer sentiment index slumped unexpectedly to a five-month low in December, possibly due to fears the U.S. will careen over the fiscal cliff.
The index dipped to 72.9 for December from 74.5 the previous month, missing analysts' call for an improvement to 74.7 this month.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for February delivery dropped 1% Friday to settle the week at USD109.10 a barrel.
The London-traded Brent contract added 0.75% over the week, while the spread between the Brent and the crude contracts stood at USD20.20 a barrel.