LONDON: Oil slipped to around $110 a barrel on Thursday as US budget talks stumbled, stoking concerns about demand in the world's biggest oil consumer.
The conflict over the so-called "fiscal cliff" talks is expected to grow more heated as the action shifts to the floor of the US House of Representatives for the first time.
US President Barack Obama has accused opponents of holding a personal grudge against him, while the top Republican negotiator John Boehner called the president "irrational".
"I don't think there has been a material shift in position.
There is going to be some sort of muddle-through agreement," said Jack Pollard, commodities research analyst at Sucden.
"At the moment we're subject to some political posturing, and as a result we have the oil markets moving with the ebb and flow of the headlines."
Brent crude slipped 21 cents to $110.15 a barrel by 1207 GMT, after settling $1.52 higher in the previous session, the biggest one-day gain since Nov. 19. US oil fell 7 cents to $89.91.
Oil prices and other riskier assets will remain under pressure as the deadline for a budget agreement at the end of the year comes closer with no sign of a deal yet.
A patch of promising data from Germany and the United States kept a floor under prices, however.
Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.
Also adding to positive sentiment were data showing US homebuilding permits touched their highest level in nearly 4-1/2 years in November.
Investors were looking to US jobless claims data due later on Thursday for further clues on the country's economic health.
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