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updated: 11/29/2012 6:58 AM

Oil rises as worries over U.S. budget deal ease

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Associated Press

BANGKOK -- The price of oil rose Thursday as U.S. leaders voiced optimism that a budget deal would be reached before the end of the year.

Benchmark crude for January delivery was up 53 cents to $87.02 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped 69 cents to finish at $86.49 per barrel in New York.

Oil has traded in a narrow range this month as cautious investors await the outcome of budget talks in Washington. Without an agreement, huge tax hikes and spending cuts will automatically take effect Jan. 1 -- the deadline dubbed the "fiscal cliff."

Economists say that could push the U.S. back into a recession, and it would mean less demand for oil and other energy products. But Republican House Speaker John Boehner and President Barack Obama both issued statements Wednesday indicating that negotiations were progressing.

In Europe, meanwhile, sentiment improved this week after Greece's bailout creditors agreed to pay its next installment of loans and outlined a series of measures to lower its debt load over the coming decade.

Separately, the American Petroleum Institute reported that crude oil supplies rose 1.96 million barrels in the week ending Nov. 23.

Brent crude, which is used to price many international varieties of oil, rose 29 cents to $109.80 per barrel on London's ICE Futures exchange.

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

-- Heating oil rose 0.9 cent to $3.03 per gallon.

-- Wholesale gasoline rose 0.7 cent to $2.694 per gallon.

-- Natural gas fell 2.7 cents to $3.774 per 1,000 cubic feet.

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