Crude reclaims $90 on supply fears, ‘cliff’ talks
By Barbara Kollmeyer, MarketWatch
NEW YORK — Crude-oil futures tapped $91 a barrel Wednesday as investors eyed a potential supply disruption out of Iraq and after President Barack Obama said he would return early to Washington to try and work out a deal on the budget with Congress.
Crude for February delivery CLG3 +2.65% lately jumped $2.33, or 2.6%, to $90.94 a barrel.
Oil prices settled 5 cents a barrel lower on Monday. Trading was closed Tuesday for the Christmas holiday.
“What is a holiday week without a crisis? Oil is rising in part on concerns of reduced oil flow out of the Kurdish areas of Iraq into Turkey over a pay dispute,” said Phil Flynn, senior market analyst at the Price Futures Group.
Tensions have been simmering for some time. ”That interruption of supply is raising the risks of a conflict between the Iraqi and Kurdish areas,” said Flynn, in emailed comments.
Oil was also getting a lift on hopes of a last-minute deal over the so-called fiscal cliff. The White House and congressional Republicans failed to reach a deal ahead of the Christmas break. See MarketWatch's fiscal cliff page
Returning from a Hawaii vacation, Obama is due to reach Washington early Thursday to take part in talks aiming at avoiding far-reaching austerity measures due to kick in at the beginning of 2013, according to media reports. Read: Obama returning to DC early for fiscal-cliff talks
Both chambers of Congress are also due to return to work on Thursday. Just a few days remain before year’s end, after which a package of spending cuts and tax increases kicks in. Economists warn that going over the cliff could push the U.S., the largest global economy, back into recession.
“The worries about the fiscal cliff have been holding the oil market back,” said Flynn. “With the president cutting his vacation short some suspect there may be a grand deal in store. We will see because many others are skeptical.”
Crude’s rally extended to other energy futures contracts after the Christmas break.