Oil Price Slides as US Fiscal Cliff Rally Fizzles
The price of oil fell back below $93 a barrel on Thursday as euphoria over a U.S. fiscal deal fizzled and traders worried about ample crude supplies and lackluster demand.
By early afternoon in Europe, benchmark crude for February delivery was down 55 cents to $92.57 a barrel in electronic trading on the New York Mercantile Exchange. Prices had jumped Wednesday after a deal in Washington averted the dreaded “fiscal cliff” of automatic tax increases and spending cuts. The contract rose $1.30 to finish at $93.12 a barrel on the Nymex.
Despite the stopgap budget deal, more hurdles are ahead for the U.S. economy, including a new deadline for more spending cuts in two months.
Moreover, Moody’s Investors Services said the U.S. government’s “AAA” credit rating could be at risk if lawmakers fail to take additional steps to lower the deficit, which has topped $1 trillion annually in each of the past four years.
The International Monetary Fund also urged Washington to keep working on raising revenues and cutting spending to put “U.S. public finances back on a sustainable path without harming the still fragile recovery.”
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