Oil Falls on "Fiscal Cliff" Fears

NEW YORK, Nov. 28 (Xinhua) -- Crude prices fell for a third consecutive day on Wednesday as fears for the looming "fiscal cliff" weighed on the markets.

Crude prices started to decline after Senate Majority Leader Harry Reid said late Tuesday that there has been "little progress" in dealing with the "fiscal cliff," which worsened worries about the country's fiscal stability and economic outlook.

Negotiations resumed this week after the Thanksgiving holiday. Although both Democrats and Republicans expressed the willingness to reach a debt deal to avoid the "fiscal cliff," investors remained worried as the Dec. 31 deadline approached.

Oil gave up some losses after U.S. House Speaker John Boehner voiced optimism that Republicans could broker a deal with the White House. But among Senate Democrats there were deep divisions over entitlement cuts, even if Republicans agree to raise taxes. To add to the pressure, new U.S. home sales unexpectedly dropped 0.3 percent in October, along with lower home prices, according to the Commerce Department.

However, oil obtained support from the Energy Information Administration's weekly inventories report, which showed U.S. crude stocks surprisingly fell 300,000 barrels in the week ended Nov. 23 due to a strong draw of refinery demand.

Traders were also closely watching the situation in the Middle East. Egypt, an important power in the region, was facing violent protests over President Mohamed Mursi for the sixth day. The fragile cease-fire between Israel and Hamas and continuing unrest in Syria kept posing threat to oil supplies, which limited oil losses.

Light, sweet crude for January delivery lost 69 cents, or 0.79 percent, to settle at 86.49 dollars a barrel on the New York Mercantile Exchange. Brent crude for January delivery dropped 36 cents, or 0.33 percent, to finish at 109.51 dollars a barrel.