Concerns Over Economy Driving Up Oil Prices

By CnAgri Print

Crude oil ended higher on Thursday, recovering from a steep plunge in the previous session, but gains were only modest as trepidation over Europe's economy and looming negotiations over the U.S. "fiscal cliff" weighed on the market. Crude oil's rebound came after Brent futures dropped nearly 4 percent and U.S. crude slumped almost 5 percent on Wednesday as problems facing European and U.S. economies applied pressure, along with data showing rising oil stockpiles in the United States.

According to Reuters, traders said crude oil and gold got late-day pushes from possible geopolitical tensions coming out of the Middle East after the Pentagon said Iran attempted to strike an unmanned U.S. drone over the Arabian Gulf last week.

Wall Street eased lower despite the release of positive economic data, as investors prepare for heated negotiations in Washington to avoid the "fiscal cliff" in January.

After U.S. President Barack Obama won a second term on Tuesday, anticipation is high that Democrats and Republicans will move quickly to avert the $600 billion package of automatic spending cuts and tax increases that could crush the U.S. economic recovery.

Meanwhile, weakness in the U.S. economy at a time China is struggling to improve its growth rate and Europe is grappling with its debt crisis would diminish the global economic recovery even further.