NEW YORK (AP) — The price of oil rose 1 percent Friday as traders weighed a new debt deal in Europe and political bickering in the U.S. over looming tax increases and budget cuts.
U.S. benchmark crude rose 84 cents to close at $88.91 per barrel in New York. In London, Brent crude rose 47 cents to close at $111.23 per barrel. Natural gas continued to tumble on forecasts for a warm beginning to December. It fell 2.4 percent to close at $3.56 per thousand cubic feet and has dropped 5.5 percent since Tuesday.
German lawmakers approved further aid to Greece Friday, raising hopes that Europe will continue to slowly heal from its debt crisis. In the U.S. lawmakers reported no progress in talks to avoid a series of tax increases and spending cuts that economists say risk a recession if they go into effect at the start of next year.
If Europe emerges from its debt crisis, increased economic activity there could push up global oil demand. But a slower U.S. economy would reduce demand.
Traders still don't believe, though, that U.S. lawmakers will fail to come to a deal, said Bob Yawger, an analyst at Mizuho Securities USA. Even with Republican House Speaker John Boehner saying Friday that lawmakers were "almost nowhere" on reaching a compromise.
Oil had its first monthly gain since August, but is still trading below the 2012 average of $94.65 per barrel. The price wavered between $84 and $89 per barrel in November with few dramatic moves up or down. Analysts say oil would be even lower if not for events in the Middle East.
Julian Jessop, an analyst at Capital Economics in London, estimates that oil is priced $10 to $20 per barrel higher because of worries that the violence in the Middle East could spread and disrupt future oil supplies.
Oil supplies are relatively high and economies around the world are growing slowly. So demand for fuels to ship goods and for travel is weaker than expected.