Oil Slips on Impasse in U.S. Budget Talks

NEW YORK (AP) -- The price of oil fell slightly as critical budget negotiations in Washington reached an apparent impasse.

Benchmark crude is down 12 cents to $86.65 a barrel in morning trading Thursday in New York.

Enthusiasm for the Federal Reserve's latest moves to boost the U.S. economy, announced Wednesday, waned as budget talks stalled. President Barack Obama and Republican leaders don't appear to be close to reaching a deal before year's end. Without an agreement, hundreds of billions of dollars in tax increases and government spending cuts will automatically take effect in January.

That prospect, known as the "fiscal cliff," has the force to throw the U.S. economy into recession, experts say, likely hurting demand for energy.

Prospects at the gas pump are relatively better, however. The average price for a gallon of regular unleaded dropped more than a penny to $3.30, the lowest since July 3. That's still about 3 cents more than a year earlier.

Brent crude, used to price international varieties of oil, fell 64 cents to $107.36 a barrel on the ICE Futures exchange in London.

In other energy futures trading on New York Mercantile Exchange:

• Heating oil was up 1 cent at $2.97 a gallon.
• Natural gas lost 3 cents to $3.35 per 1,000 cubic feet.
• Wholesale gasoline was flat at $2.64 a gallon.