NEW YORK, N.Y. – The price of crude fell slightly Thursday following a reported drop in consumer confidence and growing pessimism that political leaders in Washington can reach a budget deal.
Benchmark West Texas Intermediate crude fell 11 cents to finish at US$90.87 a barrel on the New York Mercantile Exchange.
Brent crude, used to price international varieties of oil, fell 27 cents to finish at US$110.80 a barrel in London.
Senate Majority Leader Harry Reid said the United States appeared headed for automatic tax hikes and spending cuts on Jan. 1 because of a lack of progress in budget negotiations between President Barack Obama and Congress.
With time running out to avoid a “fiscal cliff,” traders fear that the U.S. could slip into another recession, which would cut demand for energy.
The budget negotiations have begun to drag on consumer confidence, and that too can affect energy prices.
The consumer confidence index fell this month to 65.1, down from 71.5 in November, the Conference Board said Thursday. It was the second straight monthly decline and the lowest level since August.
Thursday’s decline in oil followed a big gain the day before, when reports of higher U.S. home prices and hopes of a budget deal fuelled optimism in the market.
Investors will be monitoring fresh information on U.S. stockpiles of crude and refined products over the next day. The U.S. Energy Department’s Energy Information Administration is expected to report that crude oil supplies shrank by two million barrels in the week ended Dec. 21, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
That drop could be due in large part to refineries using more crude to produce gasoline, diesel and other refined products. Tom Pawlicki, director of market research at EOX Live, told Platts that gasoline supplies should rise as refineries ramp up.
“Demand has been trending lower since mid-November and shouldn’t pressure inventories much,” Pawlicki said.
Analysts surveyed by Platts think U.S. gasoline inventories rose by 250,000 barrels last week.
In other energy futures trading on the Nymex, wholesale gasoline rose less than a cent to end at US$2.82 a U.S. gallon (3.79 litres), heating oil rose two cents to end at US$3.07 a gallon and natural gas lost four cents to finish at US$3.35 per 1,000 cubic feet.
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