Barack Obama

Oil prices plunged today, as discussions to avert the so-called US fiscal cliff came to a halt once again after having shown indications of progress earlier in the week.

Brent crude dropped by 49 cents to $109.87 a barrel, while US oil also slipped by 39 cents to $89.59, reported Reuters.

On Wednesday, President Barack Obama and House of Representatives Speaker John Boehner continued with their intense negotiations over a possible deal to avert the fiscal crisis.

Talks took an unpleasant turn, when Obama accused his opponents of having a personal grudge against him, while Boehner called the president "irrational".

In Germany, business sentiments soared in December 2012, as outlook increased at its fastest rate in two and half years, indicating that the largest economy in Europe can recover quickly after a weak performance in 2012.

Oil prices also received some support from a decline in US crude oil and distillate stocks far more significant than the estimations of Reuters’ poll.

As per the data, crude stocks slipped by 964,000 barrels to 371.65 million barrels, marking 4.1 million drop over the 1.1 million forecast, while crude imports dropped 101,000 barrels per day (bpd) to 8.36 million bpd.

Oil prices are also expected to rise when the sanctions on financial transactions with Iran, imposed by US, begin in February 2013.

The sanctions have already forced buyers to pay for oil from the OPEC producer, which could lead to a reduction in supply, thereby supporting oil prices.

Image: US President Barack Obama. Photo courtesy of Elizabeth Cromwell.