Oil rises slightly ahead of US fiscal-cliff talks

AP News
Posted: Dec 28, 2012 7:45 AM

The price of crude edged up toward $91 a barrel on Friday, ahead of another effort in Washington to strike a budget deal before the year-end deadline.

By early afternoon in Europe, benchmark crude for February delivery was up 6 cents to $90.93 a barrel in electronic trading on the New York Mercantile Exchange.

The contract fell 11 cents to finish at $90.87 a barrel Thursday, following a reported drop in U.S. consumer confidence and growing pessimism that President Barack Obama and Republican lawmakers will reach a compromise on ways to avoid the so-called fiscal cliff — hundreds of billions of dollars in government spending cuts and tax increases that take effect automatically in 2013 unless lawmakers act.

Hopes that a compromise might be reached were raised after congressional leaders were invited to the White House for talks later Friday, while the House of Representatives will meet Sunday and stay in session until Jan. 2, the day before the new Congress is sworn in.

"We now have to go again into the weekend with the 'fiscal cliff' risk, and if it is not solved then crude oil could start 2013 with a correction," said Olivier Jakob of Petromatrix in Switzerland.

On the other hand, a U.S. budget deal is expected to boost oil prices.

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Oil prices were also helped by expectations of a drop of around 2 million barrels in U.S. crude supplies last week. The Energy Information Administration releases its weekly report later Friday.

In London, Brent crude, used to price various kinds of foreign oil, was down 16 cents to $110.64 a barrel on the ICE Futures exchange.

In other energy futures trading:

— Wholesale gasoline was down 1.22 cents to $2.7771 a gallon.

— Heating oil fell 0.48 cent to $3.0441 a gallon.

— Natural gas lost 3.5 cents to $3.377 per 1,000 cubic feet.


Pamela Sampson in Bangkok contributed to this story.