Oil declines as cliff negotiations turn sour

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Investing.com - Crude oil futures fell during Thursday's Asian session after posting an impressive gain during Wednesday's U.S. session as traders digested news that U.S. budget talks had taken a sudden turn for the worse.

On the New York Mercantile Exchange, light sweet crude futures for February delivery fell 0.44% to USD89.58 per barrel. During Wednesday's U.S. session, crude settled at USD90.04 a barrel, up 1.86%.

Earlier in the day, the U.S. Energy Information Administration said U.S. oil inventories slipped by 964,000 barrels to 371.7 million barrels in the week to Dec. 14., while gasoline stocks rose by 2.2 million barrels to 219.32 million barrels.

Traders focused more on the inventory then some housing data released in the U.S. Wednesday. The Commerce Department said new home construction fell 3% last month to a seasonally adjusted rate of 861,000 units. Economists expected a reading of 865,000 units. The October number was revised down to 888,000 from an initial reading of 894,000.

Oil also got a lift from news that OPEC member Iran will continue its uranium enrichment program despite requests from the West to cease the program. Israel has threatened airstrikes against Iran if the latter proceeds with its nuclear goals.

Despite those factors, it was the fiscal cliff that traders seemed to be focusing regarding oil in Thursday's Asian session.

Those talks took a noticeable turn for the worse during Wednesday's U.S. session when President Obama accused his Republican opponents of making the cliff debate personal. Republicans fired back, saying the President's opposition to House Speaker John Boehner's so-called Plan B is "bizarre and irrational."

Speaker Boehner's Plan B consists of raising income taxes only those American households earning more than $1 million per year while keeping current tax levels in place for all other taxpayers.

Even amid the increasingly personal rhetoric, President Obama said he is still optimistic that the two sides can reach an accord and he hopes to get the deal by Christmas.

Elsewhere, Brent crude for February delivery fell 0.06% to USD110.06 per barrel.

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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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