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updated: 12/27/2012 7:20 AM

Oil hits $91 ahead of 'fiscal cliff' talks

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Associated Press

The price of oil hovered around $91 a barrel Thursday as U.S. political leaders geared up for another attempt to reach a budget deal to avoid the "fiscal cliff."

By early afternoon in Europe, benchmark oil for February delivery was up 9 cents to $91.07 a barrel in electronic trading on the New York Mercantile Exchange. Prices rose sharply Wednesday on higher U.S. home prices and hopes of a budget deal in Washington. The contract jumped $2.37, or 2.7 percent, to finish at $90.98 per barrel in thin post-Christmas trading in New York.

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President Barack Obama was returning to Washington on Thursday after a brief vacation to resume budget talks with Congress. Negotiations are aimed at avoiding deep budget cuts and tax increases that would kick in on Jan. 1 and that some say would send the U.S. into another recession.

"Fiscal cliff discussions in the U.S. are broadly expected to yield results in the coming days although both sides remain locked in political stalemate," said a report from JBC Energy in Vienna.

Later Thursday in the U.S., the Conference Board will release its December survey of consumer confidence. The forecast is that the confidence index declined to a reading of 71 from 73.7 in November. A separate survey last week from the University of Michigan showed consumer confidence tumbled this month. Consumers may be starting to worry about whether Congress and Obama can reach a budget deal.

Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending Dec. 21 is expected to show a draw of 2 million barrels in crude oil stocks and a build of 250,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Thursday, while the report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Friday. Both reports are being released two days later than usual because of Christmas.

In London, Brent crude, used to price various kinds of foreign oil, was down 60 cents to $110.47 per barrel.

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

--Heating oil added 0.25 cent to $3.0382 a gallon.

--Wholesale gasoline fell 1.53 cents to $2.7732 a gallon.

--Natural gas lost 4.8 cents to $3.344 per 1,000 cubic feet.

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