Brent Slides as Fiscal Cliff Negotiations Heat Up
Brent crude oil was down on Friday morning after a choppy day of trading on Thursday. The commodity traded at $109.57 on Friday morning.
The decline in price came after Republican Speaker of the House John Boehner's proposal was rejected by his peers in Washington. The proposal suggested raising taxes for those with over $1 million in income and countered President Obama's original plan to raise taxes for Americans with an income higher than $400,000.
Earlier in the week, the negotiations between democratic and republican lawmakers in Washington seemed to suggest that a compromise was in sight. However, Thursday's news of Boehner's failed plan has caused many to speculate that the fiscal cliff deadline, January 1st, won't be avoided. Should the negotiations prove fruitless before this date; most economists have forecast that the fiscal cliff, or package of tax increases and spending cuts, will send the U.S. into a recession.
According to the BBC, Boehner's plan was regarded by many as an effort to absolve the Republicans of any blame should the negotiations continue past the January 1st deadline.
While the demand aspect of crude prices took a nosedive, the supply side issues kept prices elevated. In Syria, ongoing fighting continued to raise the death toll and remind investors that instability in the region could cause supply interruptions. With no clear resolution in sight and several of Syria's neighbors already involved in the tension, many are expecting 2013 to bring further conflict in the region.
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