Oil prices drop as "fiscal cliff" talks stall

An oil drill in Taft, Calif. David McNew/Getty Images

LONDON The price of oil edged lower Thursday as talks between U.S. political leaders on a crucial budget deal hit a new snag.

By midday in Europe, benchmark crude for February delivery was down 10 cents to $89.88 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.58 on Wednesday, the biggest one-day price rise in a month.

Negotiations between President Barack Obama and Republican House Speaker John Boehner have dictated market sentiment in recent weeks. On Wednesday, it appeared that a deal to avoid the so-called "fiscal cliff" of automatic spending cuts and tax hikes due at the start of next year is still out of reach. The White House threatened to veto an alternative plan that Boehner proposed.

Without a deal, the hundreds of billions of dollars in spending cuts and tax hikes that will take effect could throw the U.S. economy back into recession, analysts have said. Such a prospect would likely mean decreasing energy demand.

In other energy futures trading, Brent crude, used to price international varieties of oil, fell 19 cents to $110.17 per barrel in London.

On the New York Mercantile Exchange:

- Heating oil was unchanged at $3.04 a gallon.

- Natural gas rose 5 cents to $3.37 per 1,000 cubic feet.

- Wholesale gasoline fell 1 cents to $2.73 a gallon.




Live Video

Market Data

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

Watch Now

Market News

Stock Watchlist

New Android App

For your Android phone and tablet, download the FREE redesigned app, featuring CBSN, live 24/7 news.