Oil slipped in choppy trading on Monday, as markets balanced concerns about U.S. fiscal problems against geopolitical tensions and strong oil demand in China.
Prices seesawed throughout the day before heading lower in the afternoon as worries about looming U.S. tax increases and spending cuts – the so-called fiscal cliff – weighed on markets.
Early support came from data suggesting that implied oil demand in China, the world’s second-largest oil consumer, grew 6.5 percent in October from a year earlier, bolstered by inventory building and new production capacity.
In addition, Israel’s army fired tank shells into Syria in response to a Syrian mortar shell that struck the Golan Heights, stirring concerns Israel could become drawn into the conflict.
Tensions in the Middle East, including the West’s standoff with Iran over the OPEC nation’s nuclear program, have lifted oil throughout the year, while worries about the impact of the struggling global economy on fuel demand have pushed prices down.