Oil prices jumped Wednesday as President Barack Obama headed back to Washington for a last-ditch attempt to secure a “fiscal cliff” deal with Republicans ahead of a year-end deadline.
New York’s main contract, West Texas Intermediate (WTI) for February delivery, gained $2.37 to settle at $90.98 a barrel, its highest level in almost ten weeks.
Brent North Sea crude for February delivery climbed $2.27 to $111.07 a barrel in London trade.
With the clock ticking, Obama and Congress are under increasing pressure to hammer out a compromise to avoid looming tax hikes and deep, mandated spending cuts that are slated to take effect next month.
Experts warn that going over the so-called fiscal cliff could plunge the United States economy back into recession. And that could hurt oil demand in the world’s biggest consumer of crude.
“Hopes for progress have been fueled by President Obama’s early return from his family vacation in Hawaii,” said Lisa Finstrom of Citi Futures and OTC Clearing.
If investors believe that Democrats and Republicans can reach agreement, that works in favor of crude prices “as the chances for recession decrease,” said James Williams of WTRG Economics.
Aside from Obama’s return to Washington, Williams said other factors impacting the market in post-Christmas activity included thin trades and, to some extent, developments in Iraq.
Oil exports from the Middle East nation’s autonomous Kurdistan region via the federal government have been slashed in the latest chapter of a long-running payments row, a spokesman said earlier Wednesday.
Baghdad and Arbil are at odds over issues including Kurdistan’s refusal to seek approval from the central government for oil contracts it has awarded to foreign firms, and over a swath of disputed territory in northern Iraq.
[Image via Agence France-Presse]