Oil extended its rise above $87 a barrel on
Tuesday amid optimism American leaders can reach a budget deal and avoid
automatic tax and spending cuts that might dampen growth and crimp demand for
crude.
Benchmark oil for January delivery was up
44 cents at $87.65 a barrel at late afternoon Bangkok time in electronic
trading on the New York Mercantile Exchange. The contract rose 47 cents to
close at $87.20 on Monday in New York.
Optimism that the so called "fiscal
cliff" will be avoided has increased as President Barack Obama backs away
from what had once been ironclad positions. A new proposal handed to House
Speaker John Boehner on Monday drops Obama's long-held insistence that taxes
rise on individuals earning more than $200,000 and families making more than
$250,000.
Obama is now offering a new threshold of
$400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he
had argued for a few weeks ago. The meeting came after Boehner, who is fronting
negotiations for the Republican-controlled Congress, on Friday offered to raise
taxes on some wealthy earners, but only if Obama agrees to cuts in benefit
programs.
Brent crude, which is used to price
international varieties of oil, was up 56 cents to $108.20 on the ICE Futures
Exchange in London.
In other energy futures trading on the
Nymex:
_ Heating oil rose 1.5 cents to $2.969 a
gallon.
_ Natural gas fell 0.3 cent to $3.355 per
1,000 cubic feet.
_ Wholesale gasoline added 1.6 cents to
$2.665 a gallon.
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