Crude oil made new one-week low

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Crude oil futures declined during European morning hours on Wednesday, trading near the lowest level in a week as a lack of progress in negotiations for a deal to avoid a U.S. budget crisis before a January deadline weighed on appetite for riskier assets.
Oil traders were focusing on closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD86.95 a barrel during European morning trade, down 0.25% on the day.
New York-traded oil prices fell by as much as 0.3% earlier in the day to hit a session low of USD86.92 a barrel.
Markets participants continued to monitor developments surrounding the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
Senate Majority Leader Harry Reid spooked investors Tuesday after saying that there had been “little progress” made toward reaching a deal by the end of the year.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the five weeks left before the January 1 deadline.
Doubts over the Greek debt deal also weighed on sentiment. Greece’s constitutional lenders reached an agreement Tuesday to reduce Greece’s debt-reduction target by EUR40 billion to 124% of gross domestic product by 2020.
But the lack of detail on how Greece will implement reforms needed to meet its new debt targets dented investor confidence.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.1% to trade at 80.47.
A stronger dollar makes U.S. commodities more expensive for importers holding other currencies.
Oil traders now looked ahead to weekly data from the U.S. government on oil supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles increased by 0.3 million barrels last week, while gasoline inventories were forecast to rise by 0.85 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 1.96 million barrels last week, while gasoline stocks increased 2.28 million barrels.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery shed 0.3% to trade at USD109.58 a barrel, with the spread between the Brent and crude contracts standing at USD22.63 a barrel.