Economic fears lead oil lower Crude oil lost ground on the week on economic worries in the US and Europe, while concerns about tensions in the Middle East receded. The Brent benchmark lost 3.9 per cent from a week ago. Uncertainty over the US fiscal cliff budget negotiations, cuts in eurozone growth forecasts by the European Central Bank and a downgrade of the German gross domestic product estimate by the Bundesbank also weighed on the market. Although violence in Egypt and the Syrian civil war continues, the ceasefire between Hamas and Israel after the recent military clash has calmed nerves on the oil markets. ICE January Brent was trading at $106.98 a barrel, while Nymex January West Texas Intermediate was at $86.24 a barrel, down 1.7 per cent. The decline in the Brent benchmark led to the price difference between the two oil contracts narrowing sharply. WTI's discount to Brent fell from $22.32 a barrel to $20.71. The price difference, which is heavily traded by short-term investors, has fluctuated in a narrow range between $21 and $24 a barrel over the past few months. "[The spread] seems to have broken through the range," said Amrita Sen, chief strategist at oil consultancy Energy Aspects in London. Investors were looking ahead to the expansion of the Seaway pipeline, which carries crude from Cushing, the trading hub for WTI in Oklahoma, to the US gulf coast. This week, the US government's energy analysis body forecast that the WTI discount would narrow eventually, averaging about $9 per barrel in 2013 and 2014 and shrinking to about $2 after 2020. The oil market is now focused on next week's Opec meeting in Vienna. Although few analysts expect changes to existing policies and production targets, "there is still plenty of risk for Opec ministers to consider and manage," said JPMorgan. Challenges, including US fiscal troubles, slowing European growth, rising geopolitical risk in the Middle East and Asia and a possible rise in non-Opec production growth, led by North American shale oil, were likely to be among the topics discussed by the oil cartel, the bank said. Opec ministers will also need to consider political risks in the Gulf countries, including potential unrest in Kuwait and Bahrain. Although Saudi Arabia could live with lower oil prices, some of the Gulf Co-operation Council's "monarchies cannot really afford to lose revenues," said Olivier Jakob of consultancy Petromatrix.