Investing.com - Crude oil futures were lower during early U.S. morning trade on Monday, amid reduced hopes that U.S. lawmakers can come to an agreement to resolve the "fiscal cliff" impasse just hours before the year-end deadline.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD90.14 a barrel during early U.S. morning trade, down 0.7% on the day.
New York-traded oil prices fell by as much as 0.85% earlier in the session to hit a daily low of USD90.05 a barrel.
Trading was expected to remain subdued, with year-end positioning driving flows and as holidays in many countries limit activity.
Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
U.S. President Barack Obama met with congressional leaders at the White House Friday afternoon, but both sides failed to reach an agreement ahead of the looming year-end deadline.
Senate Majority Leader Harry Reid said the Senate would resume sitting on Monday to continue discussions, but there were still significant differences between the two sides.
Without a deal, the U.S. could fall back into recession and drag much of the world down with it.
The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil's losses were limited after a report from HSBC released earlier confirmed that manufacturing activity in China expanded at the fastest pace since May 2011 in December.
The final version of China's HSBC Purchasing Managers Index rose to 51.5 in December from a final reading of 50.5 in November.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand in recent years.
For the year, New York-traded oil prices lost nearly 8%, the first annual decline since 2008, as increasing concerns over the outlook for global economic growth and the impact on future oil demand prospects dampened the appeal of the commodity.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery dropped 0.9% to trade at USD109.64 a barrel, with the spread between the Brent and crude contracts standing at USD19.50 a barrel.
London-traded Brent prices outperformed New York crude in 2012, adding nearly 14% as a combination of lingering concerns over a disruption to supplies from the Middle East and worries over declining production in the North Sea-region have been supporting Brent prices.
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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.
