Investing.com - Investing.com - Crude oil futures trimmed earlier gains to trade little changed during U.S. morning hours on Tuesday, as traders continued to focus on talks in Washington to avert the fiscal cliff of spending cuts and tax hikes.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD87.85 a barrel during U.S. morning trade, up 0.2% on the day.
New York-traded oil prices rose by as much as 0.8% earlier in the day to hit a session high of USD88.38 a barrel, the strongest level since December 5.
Investors continued to monitor 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, unless a divided Congress and the White House can work out a compromise in the two weeks left before the deadline.
Late Monday, President Barack Obama made a counter-offer to avert the crisis. The White House's latest proposal included a major change in position on tax hikes for the wealthy, moving closer to the Republicans' position.
President Obama said recently that any solution must include spending cuts and raising revenue, including increasing taxes on the wealthiest. Republican leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.15% to trade at 79.50, the lowest level since October 19.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Market participants now looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles fell by 900,000 barrels. Gasoline supplies may have climbed 1.7 million barrels to the highest level in eight months.
The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery tacked on 0.4% to trade at USD108.06 a barrel, with the spread between the Brent and crude contracts standing at USD20.21 a barrel.
The spread between the two contracts narrowed sharply on Monday on news that the Seaway pipeline, which transports crude between Cushing, Oklahoma, and Houston, Texas, will be expanded starting next month.
Pipeline operators Enterprise Products Partners and Enbridge said they plan to expand the 150,000 barrel per day Seaway pipeline to 400,000 barrels per day by next month and to 850,000 barrels a day of crude by early 2014.
The news spurred hopes the pipeline expansion may help ease a supply glut in Cushing, the delivery hub of the NYMEX futures contract.
Investing.com - Investing.com offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
Read more News on Investing.com or Follow us on Twitter at @ Newsinvesting
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.
