On the other side of the aisle I do not think the Republican controlled House will want to be blamed for sending the US economy into another recession by holding firm on not raising taxes on those making more than $250k per year. Nor will they want to start a new cycle with a whole lot of negativity after having lost the current election. So yes they will make a deal and move on to the real problem in the US the faltering economy and persistently high unemployment problem.
A solution to the fiscal cliff would be a positive for the equity market in the US and likely have a positive impact on most global equity markets. It could also move the attention of market participants back to the many stimulus or quantitative easing programs around the world and how they may or may not impact inflation and thus commodity (including oil) values over the next several months as there are no signs that QE3 in the US, QE in the UK and Japan (in fact Japan may once again increase the size of their QE program) are going to end anytime soon. They are more likely to last though a major portion of 2013.
Global equities recovered some of their lost value but are still lower on the week as shown in the EMI Global Equity Index below. The Index gained about 0.4% over the last twenty four hours with the gains coming mostly from Asia and Brazil while most western bourses lost more ground. Not much has changed in the overall ranking of the bourses in the Index with Germany still clearly the leader of the pack followed by Hong Kong which is also showing double digit gains for the year. Overall global equities have been a negative price driver for oil and the broader commodity complex.
The weekly oil inventory cycle will be moved by one day due to the US government holiday on Monday. The weekly oil inventory cycle will begin with the release of the API inventory report on Wednesday afternoon and with the more widely followed EIA oil inventory report being released Thursday morning at 11 AM EST. With the global economy and oil fundamentals continuing to be the main focus of the trading and investing community, this week's oil inventory report could be a price catalyst especially if the actual outcome shows a large deviation from the projections. However, any inventory reaction could be short lived if the macroeconomic data, the fiscal cliff and Greece remain the main focus of most market players.