Worries about the U.S. economy following the release of a disappointing manufacturing report sent oil prices lower Tuesday.
At the New York Mercantile Exchange Benchmark crude for delivery in January dropped by 27 cents to settle at $88.82 per barrel. The same contract ended positive on Monday, with 18 cents up at $89.09 per barrel on the Nymex.
Yesterday, a trade group said that this November the US manufacturing has reached the lowest levels since July 2009. This was driven by fear among the companies concerning the spending cuts and tax increases expected to hit the US economy in 2013. This so called fiscal cliff is very close and will take full effect unless the Congress and the President reach an agreement over the budget.
In order to valuate the oil demand of the market with largest oil consumption, oil traders were waiting for fresh weekly information on US crude and refined products stockpiles.
Continuous conflicts in the Middle East kept oil prices from descending even more. Reports claim that Syria is preparing chemical and biological attacks against “rebels”. In Egypt, the political crisis is a top concern for the country’s government and neighboring states. At present, nothing endangers the supplies, thought the current tensions threaten to cross the border and transfer to other oil producers in the region.
Risk is the driving factor for oil markets. Investors should bear in mind the possible result of these events.
On the ICE Futures Exchange, Brent oil futures for January delivery fell by 0.15% to trade at $110.77 per barrel, with the spread between the Brent and crude contracts standing at $21.89 per barrel.
