Oil prices bounce back in Asian trade

AP FILE PHOTO

SINGAPORE – Oil prices rebounded in Asian trade Thursday on hopes the United States will reach a deal to avoid the fiscal cliff of tax hikes and spending cuts that would likely tip the country back into recession.

New York’s main contract, West Texas Intermediate (WTI) for January delivery, was up 19 cents at $86.68 a barrel in the morning, and Brent North Sea crude for January climbed 22 cents to $109.74.

Positive sentiment was sparked by encouraging remarks from US President Barack Obama and Republican House Speaker John Boehner, who said they were confident an agreement would be reached on the budget.

“Encouraging comments on tackling the fiscal cliff by the end of the year gave Wall Street a welcome lift,” Justin Harper, an analyst with IG Markets Singapore, said in a market commentary.

However, he added that financial markets would remain volatile until the Republicans and Democrats came up with a deal before the January 1 cut-off date, when the $600 billion worth of measures come into effect.

“Comments are likely to continue from US lawmakers, both optimistic and pessimistic, on progress,” he said.

“Each time sentiment is likely to turn sharply, leading to a volatile period for US equities, and possibly global markets, until politicians sign off on a new budget plan for 2013.”

In Europe, doubts over the implementation of an agreement that unlocked fresh emergency aid to debt-stricken Greece were also casting a shadow on the market, analysts said.