“Oil declined the most in more than two weeks because of concern that U.S. lawmakers may fail to avert spending cuts and tax increases that threaten the economy of the world’s biggest crude consumer.
West Texas Intermediate dropped as much as 1.6 percent, paring a second weekly gain, after House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, throwing talks on budget issues known as the fiscal cliff into turmoil. Oil rose a fifth day yesterday, the longest rally since September, after government data showed the U.S. economy grew at a 3.1 percent annual rate in the third quarter, higher than a previous estimate of 2.7 percent.
“We are seeing a negative reaction to Republicans rejecting the latest proposal on tax hikes,”Andrey Kryuchenkov, a commodities analyst at VTB Capital in London, said in an e-mail. “It could have a U.S. demand impact.”
WTI for February delivery fell as much as $1.45 to $88.68 a barrel in electronic trading on theNew York Mercantile Exchange, the biggest drop since Dec. 6, and was at $88.98 at 11:25 a.m. London time. Prices are up 2.6 percent this week. The volume for all West Texas Intermediate futures today was about 4 percent higher than the 100-day average.
Brent for February settlement on the London-based ICE Futures Europe exchange slid as much as $1.05, or 1 percent, to $109.15 a barrel. The European benchmark crude was at a $20.58 premium to New York-traded WTI, from $20.07 yesterday. The volume traded for all Brent futures today was about 28 percent lower than the 100-day average….”
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