Crude futures strengthen on US budget agreement

02 January 2013 08:30  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures rose by more than $1.00/bbl (€0.76/bbl) on Wednesday, buoyed by news that US lawmakers had agreed a budget deal and thus avoided “fiscal cliff” of tax increases and spending cuts.

At 07:54 hours GMT, February Brent crude on London’s ICE futures exchange was trading at $112.00/bbl, up by 89 cents/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $112.11/bbl, up by $1.00/bbl.

February NYMEX light sweet crude futures (WTI) were trading at $92.81/bbl, up by 99 cents/bbl from the previous close. Earlier, the US benchmark rose to a session high of $92.85/bbl, up by $1.03/bbl.

Crude prices and Asian equity markets rose amid news that both the US Senate and the House of Representatives had finally voted in favour of a compromise US budget plan.

The budget agreement will enable the world’s largest economy to avoid the introduction of $536bn of tax increases and $109bn in spending cuts on 1 January.

There have been concerns that the introduction of these measures could push the US economy back into recession.

Singapore’s Straits Times Index (STI) of leading shares was up by 1.35% at 3,209.68, in response to the news from the US.

There was also upbeat economic data from China with the nation’s official purchasing managers’ index (PMI) for December set at 50.6.

This is the third consecutive month in which PMI data has been above 50 and this indicates continued expansion in the key manufacturing sector in China and raises hopes of a resurgence of growth in the world’s second largest economy.

($1 = €0.76)

By: James Dennis
+65 6780 4327

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