Brent Slips Lower On Global Economic Concerns
Brent crude oil remained under pressure on Thursday morning, trading at $108.79. With the U.S. fiscal cliff still heavy on investors' minds, many are worried about decreasing oil demand in 2013.
Despite promising comments from U.S. President Barack Obama, the battle between Democrats and Republicans over how to reduce the nation's deficit raged on with both parties refusing to compromise. The main point of conflict is whether or not to raise taxes. Republicans are adamantly against raising taxes for the wealthy, while Obama has deemed tax hikes for the wealthy the best solution.
If the two do not reach a compromise before the January 1 deadline, many economists forecast that the bundle of tax increases and spending cuts will send the country into recession.
Adding to concern about the future of the U.S. economy, was weak job data that suggested U.S. private sector hiring wasn't growing as fast as expected. The eurozone economy also released weak economic data on Tuesday, causing investors to speculate that oil consumption in 2013 would be lower than expected.
Riots in Egypt and growing tension between Iraq and the U.S. have kept a floor under prices because of the threat of supply interruption.
In Egypt, an ongoing clash between President Mohamed Mursi's supporters and protesters who oppose Mursi's latest decree which grants him sweeping powers over the country and prevents anyone from legally challenging his decisions. The divide among Egyptians has resulted in violence and unrest, as protesters have pledged to continue their fight as long as needed and according to Reuters, Mursi has shown no signs of backing down either.
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