Brent Slips as Fiscal Cliff Talks Become Tense
Brent crude oil slipped a bit on Thursday morning after U.S. fiscal cliff talks soured on Wednesday. The commodity traded at $109.99 after President Obama threatened to veto Republican Speaker of the House John Boehner's latest budget proposal.
U.S. lawmakers were making progress at compromising on a budget plan to avert the looming fiscal cliff deadline of January 1. Negotiations between Democrats and Republicans were progressing with both sides making concessions and working together to create an acceptable budget for 2013, however it seems things took a turn on Wednesday after John Boehner presented his latest proposal, “Plan B”.
If the two parties cannot agree before the New Year, the already fragile economy will suffer a series of tax increases and spending cuts that have been forecast to tip the country into recession.
According to Reuters, the President made statements claiming that Boehner and his republican peers were holding a personal grudge against him while Boehner countered by saying the president was “irrational”. The unexpected turn in negotiations put a damper on Brent prices and stalled its positive momentum from the previous days' fiscal cliff progress.
However, data from Germany and the U.S. underpinned prices and added support to future crude demand forecasts. German business sentiments rose beyond expectations in December, marking two straight months of improvement. In the U.S., housing data showed that homebuilding permits rose to their highest level in over 4 years in November.
In addition to the fiscal cliff news, investors will be watching for U.S. jobless claims data due out on Thursday afternoon.
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