Crude rallied by +1.21% to settled at 4786 on hopes that Washington could be edging closer to a deal to avert the so-called fiscal cliff, which threatens to push the world's biggest oil user into recession and dent energy demand .At the end of this year, the Bush-era tax breaks and other benefits are set to expire at the same time cuts to government spending are scheduled to kick in, a combination known as a fiscal cliff that could contract the economy by 0.5% next year if Congress fails to avoid it, according to Congressional Budget Office estimates. Lawmakers and the White House have been conducting talks behind closed doors to agree on a fiscal framework for next year to avoid the cliff, with taxes serving as sticking points up to now. Democrats want tax breaks to expire on those earning $250,000 a year, far below a reported Republican offer at a minimum USD1 million a year. However, talk that Republicans continue to cool their opposition to tax hikes on the wealthy in the interest of striking a deal to avoid the cliff sent oil prices rising on Monday, as failure to agree soon enough could cool growth next year even if recession were avoided, crimping demand for fuels and energy in the process. Ahead of a weekly oil report by the API later in the day, expectation that the data would show a drawdown in crude oil stocks last week as refiners ran down inventories for year-end tax purposes, while fuel stockpiles were expected to show a corresponding build. Now technically market is getting support at 4744 and below could see a test of 4703 level, And resistance is now likely to be seen at 4813, a move above could see prices testing 4841.
Crude trading range for the day is 4703-4841.
Crude gains lifted by news of impending expansion of Seaway crude oil pipeline and optimism about a deal to avert U.S. fiscal cliff.
IEA forecasts that non-OPEC crude oil supply will rise by 900kbd YoY in 2013
Concern also persists over wider Middle East supply disruptions.
- Essar Oil to sign $1 billion financing co-operation deal with CDB
- ONGC may sell stakes in deep-water blocks to Shell
- Huge scope for improving Indian shale gas estimates: ONGC
- HPCL Visakha refinery suffers major fire due to short circuit
- No refills for multiple cooking gas connection holders from June 1