Light sweet crude for February delivery declined 0.02 percent or 2 cents to $90.96 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours. Brent crude oil futures for the February delivery fell 0.14 percent or 15 cents to $110.92 a barrel on the ICE futures exchange in London.
Investors continue to focus on the U.S. fiscal cliff as lawmakers prepare to resume budget talks. Lawmakers in Washington have less than a week to strike a budget deal, which will avert the $600 billion spending cuts and tax hikes that threaten to push the world’s largest oil consuming nation into a recession early next year.
US President Barack Obama has cut short his holidays in Hawaii and is flying back to Washington to revive budget impasse talks, which stalled last week. The White House has asked the Republicans not to reject a resolution in the Congress. House of Representatives Speaker John Boehner has asked the Senate to pass its own legislations.
However, oil futures got some support from Japanese stocks. Japanese Nikkei surged more than 1 percent as the yen declined to a 27-month low on speculation that new Prime Minister Shinzo Abe would pursue drastic stimulus measures to beat deflation in the world’s third largest oil consuming nation.
"There is no easy way to resolve the U.S. fiscal cliff, but there should be a compromise at some point and that's what the market is looking for. There are hopes that the caressive fiscal policies will help Japan get out of deflation and, as it is an importer of commodities, that’s a positive for oil markets," Tetsu Emori, a commodity fund manager at Astmax in Tokyo, told Reuters.
Oil prices advanced Wednesday as concerns about Middle Eastern stability offered support. The United Arab Emirates said it arrested UAE and Saudi Arabian citizens who were allegedly planning attacks on crude-exporting nations. Light sweet crude for the February delivery surged 2.7 percent or $2.37 and settled at $90.98 a barrel on the New York Mercantile Exchange, while Brent crude for February delivery gained $2.27 and settled at $111.07 a barrel.