Oil rises on hopes of avoiding 'fiscal cliff'
NEW YORK (AP) — The price of oil rose Thursday on optimism that a deal to avert a so-called fiscal cliff will be reached before year's end and encouraging economic news.
Negotiations still have a long way to go before a budget deal is reached. Treasury Secretary Timothy Geithner met with congressional leaders Thursday, a day after President Barack Obama and Republican House Speaker John Boehner said that talks are progressing, but complained that Democrats have yet to offer spending cuts.
If no deal is reached, a series of tax increases and spending cuts will start in January.
Benchmark crude rose $1.51 to $88 per barrel in midday trading in New York.
Also Thursday, the Commerce Department raised its estimate for U.S. economic growth. And in another encouraging sign The National Association of Realtors said its seasonally adjusted pending home sales index rose in October to its highest level in nearly six years.
Any sign the economic recovery is picking up can be a catalyst for energy prices.
Falling prices at the gas pump could also drive Americans to spend more money on other things, like holiday gifts, further fueling the economy.
The national average for a gallon of regular fell less than a penny to about $3.41 on Thursday. That is down about 12 cents from a month ago, but still higher than a year ago.
Brent crude, which is used to price international varieties of oil, rose 91 cents to $110.42 per barrel on the ICE Futures exchange in London.
Trading in other energy futures on the New York Mercantile Exchange:
— Heating oil rose 4 cents to $3.06 a gallon
— Natural gas fell 11 cents to $3.69 per 1,000 cubic feet
— Wholesale gasoline gained 2 cents to $2.71 a gallon