* Some lawmakers voice concern U.S. may go over fiscal cliff
* Asian shares steady, U.S. budget concerns weigh
* Iran putting worst impact of sanctions behind it -oil
minister
* Brent to revisit low of $107.58 – technicals
(Updates prices)
By Manash Goswami
SINGAPORE, Dec 24 (Reuters) – Brent crude fell for a third
day, staying below $109 a barrel, as uncertainty over the
ability of the United States to resolve a budget crisis before a
year-end deadline stoked concerns about demand growth in the
world’s top oil user.
The doubts over the so-called U.S. “fiscal cliff” that will
trigger harsh spending cuts and tax hikes and threatens to tip
the country back into recession further dented investor appetite
for riskier assets such as oil.
Markets have been under pressure after U.S. House of
Representatives Speaker John Boehner failed to get lawmakers to
support a deal with the White House.
Brent crude fell as low as $108.58 a barrel, the
lowest since Dec. 18, and traded 21 cents down at $108.76 by
0722 GMT. U.S. oil slipped 12 cents to $88.54.
“It’s all about the U.S. fiscal cliff issue,” said Victor
Shum, managing director at IHS Purvin & Gertz. “The chances are
that we will get a deal between the White House and the
Republicans, but the fact that Boehner failed to get members to
support his plan is worrying.”
Some U.S. lawmakers are voicing concerns the country would
go over the fiscal cliff. President Barack Obama and Boehner,
the key negotiators, are out of town for Christmas. Congress is
in recess, and will have only a few days to act before the Jan.
1 deadline.
Given this scenario, investors are now looking at a stop-gap
that puts everything off for a while as the most promising
alternative. Such a fix may help delay the spending cuts and tax
hikes further into 2013 as well as work to address in a
long-term way a budget that has generated deficits exceeding $1
trillion in each of the last four years.
“Equity and commodity markets are likely to remain exposed
on the downside to the risks associated with going over the
fiscal cliff,” Jason Schenker at Prestige Economics said in a
report. “I continue to believe that a deal will get done and we
will not go into recession next year, but we are running out of
time.”
The uncertainty and rising oil supplies will put more
downward pressure on prices in coming weeks, Shum said. He
expects U.S. crude to trade between $85 and $89 a barrel, with
Brent around $20 higher than the U.S. benchmark.
Iraq’s oil production has exceeded 3.2 million barrels a day
(bpd) so far this month and may hit capacity of 4 million bpd in
2014, its Oil Minister Abdul Kareem Luaibi said.
U.S. oil is expected to drop more to $87.30 a barrel,
according to Reuters technical analyst Wang Tao, and Brent may
keep declining to $107.58, the Dec. 17 low.
STEMMING LOSSES
Yet, losses were capped due to geopolitical tensions in the
Middle East.
Dozens of people were killed in an air strike while queuing
for bread in Syria’s central Hama province on Sunday, activists
said, with some residents giving an initial count of 90 dead.
Such a toll, if confirmed, would make it one of the
deadliest air strikes in Syria’s civil war.
Oil markets have also been on edge through most of the year
as tensions between Iran and the West escalated over Tehran’s
disputed nuclear programme.
Western sanctions on Iran’s shipping and energy sectors
caused serious problems for its oil industry earlier this year
but Iran has mostly overcome those challenges, Oil Minister
Rostam Qasemi was quoted as saying on Sunday.
Oil producer Libya is also struggling to impose authority on
a myriad of armed groups that helped oust dictator Muammar
Gaddafi last year.
“The market is trading sideways,” a Singapore-based trader
with a Western firm said.
“We are still almost at $109, which is not too bad a level.
Iran is still an issue, Libya too has had problems.”
(Editing by Himani Sarkar)
