MTECHTIPS;- Crude Oil rises on Fiscal Cliff optimism, Yen and US stockpile decline
With the fiscal cliff talks about to re-start on Thursday this week, crude oil rose for the first time in three days also aided by anticipated stockpile declines and on depreciating yen.There is widespread optimism that the fiscal cliff issue would be addressed on or before December 31 failing which automated spending cuts and tax hikes to the tune of $600 billion would be activated. This is widely expected to make a dent on US economy taking it back to a recessionary trajectory, according to US’ Congressional Budget Office.There are predictions that US crude oil stocks have dropped 1.7 million barrels, or 0.5 percent, in the week that concluded on Dec. 21 to reach 370 million barrels. The figure marks the least of stocks since October 12 as per a Bloomberg survey.“The oil market’s movement depends on the fiscal cliff but I don’t think it will lose ground,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo to Bloomberg. “In a worst- case scenario the situation may continue as it is now for one month or a few months.”“The Japanese yen has now exceeded about 85 per dollar for the first time in almost 20 months,” Hasegawa said. “That may also be a factor pushing oil markets.” he said and was quoteed by Bloomberg.