Oil Price Jumps As US Averts 'fiscal Cliff'

By SAMANTHA BOMKAMP

NEW YORK (AP) â¿¿ The price of oil jumped Wednesday on the first trading day of the new year, after a deal in Washington averted the dreaded "fiscal cliff."

The House voted near midnight to send the bill to President Barack Obama after a tense day of political brinksmanship on Capitol Hill.

Benchmark crude for February delivery rose $1.30 to finish the first trading day of the year at $93.12 a barrel on the New York Mercantile Exchange. It was as high as $93.87 a barrel at one point earlier in the session. Energy prices followed stock markets higher. In afternoon trading the Dow Jones industrial average was up about 2 percent. The Nasdaq and the S&P 500 were both up more than 2 percent.

More hurdles are ahead for the U.S. economy, including a new deadline for more spending cuts in two months. Oil analyst Phil Flynn says in the meantime, "ignorance is bliss and this deal should propel oil to...near $96 a barrel."

Brent crude, used to price various kinds of international oil, rose $1.36 to end at $112.47 a barrel on the ICE Futures exchange in London.

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 pushed the U.S. into recession. A spike in unemployment and less consumer spending would likely depress energy demand.

Some House Republicans opposed the bill, which keeps middle-class tax rates in place, while raising taxes on the wealthy, and sidesteps $24 billion in spending cuts for the time being. A majority in the House eventually agreed to a simple yes-or-no vote on the bill, which had already passed the Senate by a wide margin.

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

â¿¿ Wholesale gasoline rose 3 cents to finish at $2.80 a gallon.

â¿¿ Heating oil added a penny to end at $3.05 a gallon.

â¿¿ Natural gas fell 12 cents to finish at $3.23 per 1,000 cubic feet.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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