Submitted by Fox First at Ten on January 2nd
By SAMANTHA BOMKAMPAssociated Press
NEW YORK (AP) - 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:
- Wholesale gasoline rose 3 cents to finish at $2.80 a gallon.
- Heating oil added a penny to end at $3.05 a gallon.
- Natural gas fell 12 cents to finish at $3.23 per 1,000 cubic feet.
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