LONDON - Global oil prices slid Thursday on profit-taking as initial euphoria faded over the fiscal cliff deal in the United States, analysts said.
Brent North Sea crude for February fell 42 cents to $112.05 a barrel in late afternoon deals in London. New York’s main contract, light sweet crude for delivery in February, handed back eight cents to $93.04 per barrel.
“Crude oil prices retreated ... following the strong rally that dominated the market yesterday after the US fiscal cliff deal,” said analyst Myrto Sokou. “The US dollar started to strengthen against the euro and added some pressure to the market,” she added.
The stronger greenback makes dollar-denominated crude more expensive for buyers using weaker currencies like the euro. That tends to weigh on demand and prices. Crude futures had rallied Wednesday following news that the US — the world’s biggest consumer of crude oil — has avoided “fiscal cliff” taxation hikes and spending cuts that had threatened to plunge it back into recession.
On the first trading day of 2013, Brent had hit $112.90 per barrel — its highest level since mid-October. New York crude touched $93.87, which was a mid-September pinnacle.
However, the market has since pulled back somewhat as on growing concerns over further political wrangling in Washington in the coming months.
There are also big worries about the lifting of the debt ceiling, also at the end of February, with analysts saying the country could see a repeat of the row in summer 2011 that saw Washington’s credit rating downgraded for the first time.
“The market lost steam after the excessive buying of oil in reaction to the passing of the US fiscal cliff deal,” said Victor Shum, managing director of IHS Purvin and Gertz in Singapore.