Thursday, 03 January 2013 03:55
NEW YORK: Crude oil prices soared Wednesday on news the US Congress passed a fiscal package that prevents most of the automatic tax hikes expected to jolt the world's biggest oil consumer into recession.
New York's main contract, light sweet crude for delivery in February, jumped $1.30 from Monday to close at $93.12 a barrel, its highest close since September 18.
In London trading, Brent North Sea crude for February gained $1.36 at $112.47 a barrel.
After bitter wrangling, both houses of Congress approved a compromise bill Tuesday that provided some immediate relief from the fiscal cliff, but postponed a decision on the crucial issue of federal spending cuts.
The news sparked a global equities rally and lifted oil prices sharply higher on their first trading day of 2013.
"For oil bulls any deal is better than no deal," said Phil Flynn of Price Futures Group.
Flynn warned that the bruising US political debate was not over as lawmakers face across-the-board automated spending cuts in two months.
"Yet in the meantime ignorance is bliss and this deal should propel oil to the high end of my predicted range near $96 a barrel," he said.
The US dollar weakened, providing a lift to demand for dollar-priced crude oil.
The market also was underpinned by upbeat manufacturing news out of China, the world's second-largest economy and top energy consumer.
On Tuesday, official data showed China's manufacturing activity expanded in December for a third straight month, adding to signs the economy is emerging from a prolonged slowdown.
Copyright AFP (Agence France-Presse), 2013