BANGKOK – Oil prices rose Wednesday as President Barack Obama pushed ahead with talks to try to resolve the impending "fiscal cliff" that could derail the fragile recovery in the world's No. 1 economy.
Benchmark oil for December delivery was up 57 cents to $85.95 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange.
A package of tax increases and spending cuts takes effect in January unless the U.S. Congress passes a budget deal by then. The economy would be hit so hard that it would likely sink into recession in the first half of 2013, economists say.
But Obama this week kicked off a series of meetings with labor officials, business executives and congressional leaders aimed at working out a deal. White House aides say Obama intends to hold campaign-style events across the country after the Thanksgiving holiday to drum up support for his proposed solution to avert an economic downturn.
"People feel there's been a significant pullback over fiscal cliff worries," said Andrew Sullivan, an independent analyst in Hong Kong. "The reality is we are likely to see a solution."
The price of oil fell slightly Tuesday after the International Energy Agency predicted demand will grow at a slower pace into next year because of the sluggish global economy. The contract fell 19 cents to end at $85.38 per barrel in New York.
The IEA lowered its forecast for fourth-quarter oil demand by 300,000 barrels per day to 90.1 million barrels. Meanwhile, global oil supplies increased 800,000 barrels per day to 90.9 million barrels per day in October, the agency said.
The IEA blamed the weak European economy and superstorm Sandy, which disrupted oil imports and gasoline deliveries on the U.S. East Coast. Analysts also said uncertainty over Greece's debt situation and the so-called fiscal cliff in the U.S. were weighing on future prospects for global oil demand.
The release of weekly U.S. supply data from the American Petroleum Institute and Department of Energy will be delayed by a day because of Monday's holiday, said oil analyst Stephen Schork.
Brent crude, which is used to price international varieties of oil, rose 63 cents to $108.89 per barrel in London.
Among other energy futures on the New York Mercantile Exchange:
— Heating oil rose 1.8 cents to $2.978 per gallon.
— Gasoline rose 1.5 cents to $2.641 per gallon.
— Natural gas rose 2.6 cents to $3.765 per 1,000 cubic feet.