Crude oil dropped on Friday on concerns that US lawmakers may fail to hammer out a workable deal on the Budget crisis before the January 1 deadline, while safe-haven gold gained from the uncertainties.
Copper prices rose as fresh data confirmed a steady rebound in manufacturing in top user China, although apprehensions about the US crisis capped gains.
Still, the annual average price of brent crude oil headed for a record $111.65 per barrell in intraday trade, on course to registering its fourth straight yearly gain, although the day-to-day price has dropped 0.6% since January. Higher supplies and a 0.7% rise in the annual average brent crude oil price from a year earlier helped producers' cartel OPEC, with oil export revenues scaling an all-time high of $1,052 billion in 2012, up 2.5% from last year, the US government data showed. However, the annual average price of US crude oil tumbled by 1.2% to $94 per barrell, and the day-today price has crashed by 8.1% since the beginning of 2012.
Supply is increasing, with the US pumping the most oil in 19 years after shale oil discovery pushed production to nearly 7 million barrels per day. US crude slipped to the lowest in 12 years.
However, investors remained concerned on Friday that any failure to strike a deal to avert the so-called fiscal cliff— tax hikes and spending cuts worth $600 billion starting January— in the US could potentially drive the world's largest crude oil consumer back into recession and dent energy demand.
Brent crude shed 40 cents to $110.22 a barrel intraday, while US crude lost 10 cents at $90.70. But gold, considered to be a safe-haven asset in times of crisis, gained as the lack of a deal with the deadline just hours away kept a check on the prices of riskier assets.
Spot gold rose 0.6% at $1,665.5 per ounce intraday, having earlier soared by nearly 1% to a session high of $1,668.70. US gold futures for February delivery increased $9.80 an ounce to $1,665.70.
The precious metal headed for its 12th straight year of gains in 2012, thanks to