Oil barrel

Oil prices plunged today as the US braces itself for bigger budget battles amid worries about rising oil supply.

Brent crude slipped 79 cents to $111.68 a barrel, while US crude dropped 57 cents to $92.55, reported Reuters.

After reaching a deal to avert the fiscal cliff that would have pushed the world’s largest economy into recession, President Barack Obama and Republicans are expected to face an even bigger budget fight in the next two months.

Russia surpassed Saudi Arabia and emerged as the leading oil producer in the world in 2012, while US crude production reached a 19-year high.

The new year began with a rise in oil prices, despite expectations of a lower price in 2013, as supply offset demand.

It is expected that US crude prices will gain support from next week as a major pipeline expansion is due to ease the blockage at Cushing, Oklahoma.

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By GlobalData

A Reuters poll of eight analysts revealed that commercial crude oil stockpiles in the US are likely to have dropped last week due to lower imports as refiners drew down inventories for year-end tax purposes.

Image: In 2012 US crude production reached a 19-year high, and Russia surpassed Saudi Arabia in oil production. Photo courtesy of Lars Christopher Nøttaasen.