Oil Falls With Consumer Confidence, Budget Impasse

NEW YORK (AP) -- The price of crude fell Thursday following a reported drop in consumer confidence and also growing pessimism that political leaders in Washington can reach a budget deal.

By late morning, U.S. benchmark crude fell 35 cents to $90.63 a barrel in New York.

Senate Majority Leader Harry Reid said the nation appears headed for automatic tax hikes and spending cuts on Jan. 1 because of a lack of progress in budget negotiations between President Barack Obama and Congress. With time running out to avoid a "fiscal cliff," traders fear that the U.S. could slip into another recession, which would cut demand for energy.

The budget negotiations have begun to drag on consumer confidence, and that too can affect energy prices.

The consumer confidence index fell this month to 65.1, down from 71.5 in November, according to the Conference Board on Thursday. It was the second straight monthly decline and the lowest level recorded since August.

Investors will be monitoring fresh information on U.S. stockpiles of crude and refined products over the next day.

Prices at the pump rose Thursday. The national average for gasoline reached $3.261 a gallon, up 1.4 cents from the day before. The price is now 3 cents above a year ago.

In London, Brent crude, used to price various kinds of foreign oil, was down 82 cents to $110.25 per barrel.

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

  • Heating oil was unchanged at $3.03 a gallon.
  • Wholesale gasoline fell 1 cent to $2.78 a gallon.
  • Natural gas lost 4 cents to $3.35 per 1,000 cubic feet.

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