Commodities: Crude surges after fiscal cliff deal

LONDON (ShareCast) - Commodities prices gained across the board on Wednesday as risk appetite increased following the New-Year's-Day agreement by US politicians to avert the fiscal cliff.

While the budget saga Stateside is far from over - talks over spending cuts go on while concerns over the government's debt ceiling have resurfaced - the House of Representatives passed a Senate-backed bill in the early hours of Tuesday morning to stop massive tax rises and spending cuts, by 257 votes to 167. A day before the same legislation had cleared the Senate by a majority of 89 votes to eight.

Crude oil for February delivery was up $1.30 at $93.12 in New York, a rise of 1.42%

There were concerns that US fuel consumption, linked intrinsically to the strength of the world's largest economy, would see a huge indirect impact from the automatic spending cuts and tax increases that were scheduled to come into effect on January 1st.

The fiscal cliff - scheduled tax rises of around $536bn and spending cuts of $109bn - was widely expected to throw the US economy back into recession if politicians couldn't break months of impasse.

According to the Financial Times, oil demand in the States had fallen to 18.7m barrels a day in October, the lowest October level since 1995.

Gold prices were up $13 at $1,688.80 a troy ounce, up 0.78% on the day.

BC