Oil price falls as excitement over fiscal cliff compromise fades

The deal reached on New Year’s Day caused a short-term increase in oil prices.

Oil prices have leveled off after declining slightly from the elevated levels that had been reached following the announcement of a New Year's Day compromise between Democrats and Republicans over the tax and spending issues involved in the "fiscal cliff."

After the deal was reached, the price of oil jumped considerably on the first trading day of the new year, according to the Boston Globe.

Benchmark crude scheduled for delivery in February rose $1.30 per barrel on January 2, to finish at $93.12 on the New York Mercantile Exchange. It had reached as high as $93.87 per barrel during the day's trading session. Meanwhile, Brent crude – widely used in setting international prices – rose $1.36 to $112.47 per barrel on the ICE Futures exchange in London.

However, the rally proved to be short-lived. The Associated Press reported that the price of oil began a modest decline almost immediately, with the cost of a barrel of benchmark crude for February delivery falling 21 cents on January 3.

Going forward, the U.S. and global economies will continue to be challenged by difficult conditions. Greece and other countries in the Eurozone remain under pressure by their creditors. Immediate fears about China's economy making a "hard landing" have eased, but it remains unclear whether the nation will be able to act as an engine for driving global growth.

At the same time, significant uncertainty continues to surround U.S. policy on tax and spending levels. The fiscal cliff compromise only put off the impending budget cuts by two months, meaning another showdown is imminent.

With these challenges threatening to derail economic growth and cut into hydrocarbon producers' profits, the importance of efficiency in drill stem testing, drilling and extraction operations is paramount. Artificial lift solutions and other modern oil production equipment can help well operators maximize efficiency and bolster their bottom line.