Crude Oil closed the month close to its high of 98.24 with the close at 97.75. Crude oil prices has started the year with impressive gains, as bulls sought encouragement from the mitigating concerns regarding US fiscal cliff. US legislators have struck a deal to avoid the fiscal cliff. The deal consists of keeping most of the existing tax cuts intact except on individuals making over US$400,000 or households making US$450,000 per annum. Nothing much is done on the spending cuts, which have been delayed till March, as it seems that the Senate wants to buy some time on this.

Multitude of factors has been aiding the northward journey in the energy complex. Improving US and Chinese macroeconomic scenario, perennial Middle East tensions and start-up of the reversed and expanded Seaway pipeline is providing lot of impetus to the bulls. As the flow of the Seaway oil pipeline has been reversed, it has started draining the glut of crude from the U.S. Midwest to the Gulf coast. Reversal of oil pipeline is also expected to mitigate the problem of supply glut at the Cushing port in US, which is a strategic storage hub for WTI crude oil. Rebound in Chinese manufacturing activity has also provided a shot in the arm for the bulls. Recent flow of macroeconomic numbers in China suggests that the country's manufacturing sector continues to expand. Meanwhile, Chinese demand for oil also remains steady, with the country's 2012 oil imports rising 6.8% from 2011.

On geopolitical front, the political situation in Egypt, Syria and Yemen continues to deteriorate, which in fact has maintained the "geopolitical risk premium". Algeria was the surprise this month which has investors truly worried about what is brewing in the Middle East.