U.S. Crude Falls More Than $2 on Inventory Data

Brent crude oil hit a four-week high above US$112 per barrel on Wednesday after the U.S. Congress approved a deal to avert a fiscal crisis, while promising data from top energy consumer China also supported prices. The United States averted economic calamity when lawmakers approved a deal preventing huge tax hikes and spending cuts that would have pushed the world’s largest economy off the “fiscal cliff” into recession.

Hickey and Walters (Bespoke) submit: The chart below shows the performance of Brent (Global benchmark price) and WTI (U.S. benchmark price) crude oil over the last six months. For the last couple of years, the major trend between the two benchmark prices has been that Brent crude oil was rising at a faster pace than WTI.

While the price of WTI will probably appreciate relative to Brent over the next 12 months, the contract itself has lost its relevance as a marker for global oil markets For the first year since the futures were created, Brent crude is poised to overtake West Texas Intermediate oil as the world’s most-traded commodity.

Oil prices rose slightly on Wednesday, extending their recovery after heavy falls over eurozone debt tensions, as the market eyed demand concerns and awaited key US energy inventory data, analysts said.New York's main contract, West Texas Intermediate for delivery in August, gained 13 cents to $97.56 a barrel.Brent North Sea crude for August nudged up four cents to $117.79 in London late morning deals.Oil prices rebounded on Tuesday, one day after sliding on growing market concerns about the eurozone debt crisis and a weak US jobs market.

WASHINGTON — The U.S. economy unexpectedly contracted in the fourth quarter, suffering its first decline since the 2007-09 recession as businesses scaled back on restocking and government spending plunged. Gross domestic product fell at a 0.1% annual rate after growing at a 3.1% clip in the third quarter, the Commerce Department said on Wednesday. That was the worst performance since the second quarter of 2009, when the recession ended, and showed the economy entering the new year with no momentum.

Brent crude will hover around US$100 a barrel for the next two years, a Reuters poll showed after analysts slashed their forecasts for the oil price to reflect ample supply and sluggish economic growth. Brent crude oil will average US$107.60 per barrel this year, Reuters monthly oil price survey for April predicted on Tuesday, down from US$110.80 in last month’s poll and below last year’s average price of US$111.70.

Another day, another muppet bites the dust. From Goldman: Brent pressured as European and Chinese concerns resurface   Despite recent price action, current fundamental data looks tight  

Oil prices fell on Monday as concerns about Greek debt talks and U.S. budget negotiations outweighed worries about potential Middle East supply disruptions. After the U.S. Thanksgiving holiday muted activity late last week, the market dipped in another day of light activity as U.S. lawmakers showed little progress toward a compromise designed to avoid mandated tax increases and government spending cuts scheduled for Jan. 1.