Brent crude oil traded at 110.91 on Thursday morning. The commodity has been under heavy pressure as the US nears the January 1 deadline for its fiscal cliff negotiations.
Democrats and Republicans have failed to come to an agreement about how to deal with the country's deficit, and with only four days to go before the package of spending cuts and tax increases kicks in, many are worrying that the number one oil consumer will slip into recession.
President Obama cut his Christmas holiday in Hawaii short to resume talks on Thursday. While there is the possibility of a last minute negotiation, most are expecting lawmakers to come up with a stop-gap to delay the decision.
Brent prices have been supported by hopes that a new government in Japan will spur the country's economy and in turn increase demand. According to CNBC, statements by the country's new prime minister which declared that his top priorities would be beating deflation and taming the yen, Japanese stocks rose to an 18-month high.
In Europe, the European Central Bank's effort to revive struggling economies has given the markets renewed confidence in the region. While most are expecting 2013 to be another difficult year for the euro, many are predicting that the worst is over. After Greece's bailout package was restructured and its next installment was approved, fears that the eurozone would break up were eased.
Geopolitical worries are also underpinning Brent prices as the Syrian civil war has shown no signs of ending. As the death toll continues to rise and violence spills over into neighboring countries like Turkey, many are worried about future supply interruptions.
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