Oil Prices Rise as Fiscal Cliff Recession Fears Recede

By PABLO GORONDI

The price of oil jumped by more than a dollar on Wednesday, to above $93 a barrel, after U.S. lawmakers passed legislation to avoid a fiscal cliff that could have pushed the world's biggest economy into recession.

The U.S. House of Representatives voted near midnight to send the bill to President Barack Obama after a frantic day of political brinksmanship in Washington.

By early afternoon in Europe, benchmark crude for February delivery was up $1.49 to $93.31 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.02 to finish at $91.82 per barrel in New York on Monday.

Economists had warned that if Congress did not take action a series of tax increases and spending cuts due to automatically start this year could have helped push the U.S. into recession. They feared a spike in unemployment, which would have resulted in depressed demand for energy.

Some House Republicans at first opposed the bill, which neutralizes middle class tax increases and $24 billion in spending cuts set to take effect over the next two months while raising taxes on the wealthy. They wanted more spending cuts but hours later agreed to a simple yes-or-no vote on the bill, which had already passed the Senate.

As a result of a broad increase in market sentiment, the dollar weakened as investors felt confident to invest in relatively riskier assets. A weaker dollar makes crude cheaper and a more attractive investment for traders using other currencies. On Wednesday, the euro rose to $1.3280 from $1.3213 on Monday, the previous trading session.

Brent crude, used to price various kinds of international oil, was up $1.12 to $112.23 a barrel on the ICE Futures exchange.

In other energy futures trading on the New York Mercantile Exchange:

• Wholesale gasoline rose 3.88 cents to $2.8005 a gallon.

• Heating oil added 2.62 cents to $3.058 a gallon.

• Natural gas fell 4.1 cents to $3.31 per 1,000 cubic feet.

___

Kelvin Chan in Hong Kong contributed to this report.


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7 Comments

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hemipwr54

Consumers withdraw from Fiscal Cliff deal and stop spending due to cost of living increase and higher taxes.

January 02 2013 at 6:04 PM Report abuse -1 rate up rate down Reply
chris1011

Get a small fuel efficient car and you will have the oil companies by the ba!!s. You will pay less for your commute and you will drive down gas prices due to lower demand. My own car gets 60 to 70 miles per gallon in daily commuting in city. I used to spend $80 per week driving an 18mpg car, and now it's on the order of $80 per month. That's a $3000 savings per year that I'm not sending to OPEC.

January 02 2013 at 5:41 PM Report abuse -2 rate up rate down Reply
2 replies to chris1011's comment
hemipwr54

My car is payed off, cost nothing but gas and regular maintenance, if I go get another car it would cost me gas, regular maintenance plus a car payment, no thanks.

January 02 2013 at 6:07 PM Report abuse +2 rate up rate down Reply
democrackso

LMAO You copied and pasted that BS the other day. What do you do save a file on your computer so you can copy and paste the same crap over an over again.

January 02 2013 at 7:25 PM Report abuse +1 rate up rate down Reply
bcopleyjigs

Yep, Wall St was screaming at the top of it's lungs it is open season on the consumer! The tax man did not get that 2 - 3k a year so it's time for us to step in and take it via gas and oil prices. YIPPIE.

January 02 2013 at 4:56 PM Report abuse rate up rate down Reply
Big John

Gasoline, the biggest rip-off in the history of the United States. Too many Americans have given their lives to keep the flow of oil coming to the biggest and greediest crooks in the world. They can pay whatever takes to keep many Americans brainwashed into thinking they are getting a good deal. Thanks George!

January 02 2013 at 4:12 PM Report abuse +1 rate up rate down Reply
bruyoc

Hogwash.

January 02 2013 at 12:43 PM Report abuse rate up rate down Reply