Oil tumbles on fiscal cliff fears, European debt

Crude prices tumbled Wednesday on fears of "fiscal cliff" in the U.S. and worsening European debt problems. U.S. financial markets plunged Wednesday, with equities falling broadly as investors shifted focus to looming "fiscal cliff" in U. S. and euro zone crisis after U.S. election. After Barack Obama was reelected as U.S. president on Tuesday, investors came back to concerns over the "fiscal cliff", caused by the 600-billion-U.S.-dollar tax increases and government spending cuts that would automatically kick in on Jan. 1. Economists and business CEOs have been warning that "fiscal cliff" could trigger a recession, which cast shadow over the market. Ratings agency Fitch also urged Obama to move quickly to avoid the "fiscal cliff." Meanwhile, the market sentiment was heavily pressured by the coming capital tax hikes which was on Obama's agenda. To add to pressure, European Central Bank President Mario Draghi Wednesday said the debt crisis is starting to hurt Germany. Investors worried that the region's situation will get worse in the near term. Large scale of protests continued in Greece after the debt- ridden country's parliament voted on an austerity plan Wednesday. Approval of the plan would help the country secure the 31.5 billion euro bailout fund from international lenders and its presence in the euro zone. U.S. oil inventory data, which showed a 1.8-million-barrel build last week despite the massive disruptions caused by Hurricane Sandy on the East Coast, adding to bearish sentiment. The Energy Information Administration's report also registered a weekly increase of 2.9 million barrels for gasoline inventories. Light, sweet crude for December delivery lost 4.27 dollars, or 4.81 percent, to settle at 84.44 dollars a barrel on the New York Mercantile Exchange. Brent crude for December delivery plunged 4.15 dollars to 106. 92 dollars a barrel.