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updated: 12/31/2012 7:20 AM

Oil steady as 'fiscal cliff' deadline approaches

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Associated Press

LONDON -- Oil prices were little changed Monday as a U.S. budget deadline neared with rival politicians still at odd over key issues.

Benchmark oil for February delivery was down 8 cents late morning London at $90.72 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 7 cents to finish at $90.80 per barrel in New York on Friday.

The focus over the rest of the day will continue to focus on developments in Washington D.C. The Senate has to agree a deal by the end of Monday to avoid the so-called "fiscal cliff" of automatic tax increases and spending cuts.

Republicans and Democrats remained divided over tax and spend, raising the real prospect that financial markets will start 2013 without a clear idea over the budget policy of the world's largest economy. The main sticking point appears to be what level of income higher taxes are imposed.

Economists have warned that the U.S. economy could be thrown into recession if the tax hikes and spending cuts go into effect -- $536 billion in tax increases that would touching nearly all Americans and a loss of $110 billion in government spending.

If the deadline passes without a deal, the U.S. won't immediately sink into recession. Lawmakers can repeal the tax hikes and spending cuts retroactively if a deal is reached a few weeks after the New Year's deadline.

In London, Brent crude, used to price various kinds of foreign oil, fell 43 cents to $110.19 a barrel on the ICE Futures exchange.

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

-- Wholesale gasoline fell 0.4 cents to $2.7958 a gallon.

-- Heating oil fell marginally to $3.020 a gallon.

-- Natural gas fell 0.02 cents to $3.460 per 1,000 cubic feet.

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