Crude oil futures poised for yearly drop since 2008

MOSCOW: Crude oil headed for its first annual decline since 2008 in New York as US lawmakers sought an agreement on averting automatic tax increases and spending cuts that threaten the economy of the largest crude consumer.

West Texas Intermediate fell 0.9%, dropping for a third day. US Senate Majority Leader Harry Reid said there are "still significant differences" between Democrats and Republicans with one day remaining to avoid the budget measures known as the fiscal cliff. The volume for WTI contracts was down 56% on the 100-day average. "Prices may have been influenced by the lack of agreement on the US budget crisis, with weakness in thin volumes today," Christopher Bellew, a senior broker at Jefferies Bache in London, said on Monday. "They are still in the broad range that has prevailed for the last three months."

Crude for February delivery was at $90.09 a barrel, down 71 cents, in electronic trading on the New York Mercantile Exchange at 12:51 pm London time. Prices gained 2.4% last week, trimming this year's decline to 8.8%.

Brent for February settlement on the London-based ICE Futures Europe exchange declined $1.07 to $109.55 a barrel. The contract climbed 1.5% last week, extending its advance this year to 2.1%, a fourth annual gain. The European benchmark's premium to WTI narrowed for a fifth day to $19.46.

WTI has declined in 2012 as the US shale boom deepened a glut at Cushing, Oklahoma, America's biggest storage hub and the delivery point for the New York contract. That has left it at an average $17.44 a barrel below Brent this year, compared with a premium of about 95 cents in the 10 years through 2010. US crude production rose to 6.984 million barrels a day, the highest since 1993, in the week ended December 21, the Energy Department reported on December 28.