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Crude falls as U.S. fiscal cliff talks hit fresh snag in Congress

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Investing.com - Crude oil futures fell on Friday after House Republicans rejected a proposal put forth by House Speaker John Boehner, himself a Republican, to avoid a year-end combo of tax hikes and spending cuts.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD88.62 a barrel on Friday, down 1.68%, off from a session high of USD90.08 and up from an earlier session low of USD87.97.

Failure to strike a budgetary agreement in the U.S. will allow sweeping tax breaks to expire at the same time deep cuts to government spending kick in, a combination known as a fiscal cliff that could contract the economy by 0.5% next year if Congress fails to avoid it, according to Congressional Budget Office estimates.

Republicans in the U.S. House of Representatives canceled plans to vote on a budget proposal tabled by Speaker Boehner, which called for tax hikes on incomes over USD1 million, well above a White House proposal calling for tax hikes on incomes topping USD400,000.

Rebellion in Boehner's own party sent shockwaves through energy markets on fears that the U.S. will fail to reach a budgetary deal and allow the economy to slide into a recession or experience cooling growth rates, seriously crimping demand for fuels and energy.

Investors ignored solid data elsewhere.

The U.S. Census Bureau reported earlier that core durable goods orders, which exclude transportation items, rose 1.6% in November, beating market expectations for a 0.2% decline though down slightly from a 1.9% increase the previous month.

Durable goods orders rose by 0.7% last month, outpacing consensus forecasts for a 0.2% rise though down from a 1.1% increase in October.

Meanwhile, a separate Commerce Department report revealed that personal spending in the U.S. rose by 0.4% in November, beating expectations for a 0.3% rise and far outpacing 0.1% fall the previous month.

Also in the U.S. earlier, Thomson Reuters/University of Michigan's consumer sentiment index slumped unexpectedly in December, possibly due to fears the U.S. will careen over the fiscal cliff.

The index dipped to 72.9 for December from of 74.5 the previous month, missing analysts' call for an improvement to 74.7 this month.

Meanwhile on the ICE Futures Exchange, Brent oil futures for February delivery were down 1.12% at USD108.97 a barrel, up USD20.35 from its U.S. counterpart.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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