Oil prices recover amid positive US growth
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LONDON, Nov 29 AFP
November 30 2012, 05:01AM
Oil prices have rebounded as positive US data offset receding hopes of a deal to avoid the "fiscal cliff" of tax rises and spending cuts that is set to tip the world's biggest economy into recession.
New York's main contract, West Texas Intermediate (WTI) for delivery in January, climbed $US1.29 to $US87.78 a barrel on Thursday.
Brent North Sea crude for January advanced 94 cents to $US110.45 a barrel in late London deals.
"The better than expected US economic data hasn't harmed sentiment ... sending oil prices back towards their recent highs," said Michael Hewson, senior analyst at CMC Markets trading group.
The United States, which is the world's biggest consumer of crude oil, grew its economy at a 2.7 per cent pace in the third quarter, faster than previously estimated, the Commerce Department said on Thursday in a report that nevertheless pointed to a weaker fourth quarter.
Gross domestic product growth was revised upward from the prior estimate of 2.0 per cent, reflecting in part increases in federal government spending and private inventory investment, the department said.
The improved data helped to offset comments by Republican House Speaker John Boehner, who said the White House and Republican US lawmakers had made no headway in their crucial budget negotiations.
"The Democrats have yet to get serious about real spending cuts," and "no substantive progress has been made in the talks between the White House and the House over the last two weeks", Boehner told reporters on Thursday, barely one month before taxes are set to rise on most Americans unless a deal is struck.
Oil prices had fallen on Wednesday as traders worried about the budget negotiations.
IG analyst Justin Harper said financial markets would remain volatile until the Republicans and Democrats came up with a deal before the January 1 cut-off date, when the $US600 billion ($A575 billion) worth of measures come into effect.
"Comments are likely to continue from US lawmakers, both optimistic and pessimistic, on progress. Each time sentiment is likely to turn sharply, leading to a volatile period for US equities, and possibly global markets, until politicians sign off on a new budget plan for 2013."