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Oil prices fall as US budget talks fade to the background and global growth issues re-emerge

The price of oil fell Wednesday as economic factors other than the "fiscal cliff" moved to the forefront as the end of the year approached.

Benchmark crude for January delivery fell 8 cents at midday Bangkok time to $87.85 per barrel in electronic trading on the New York Mercantile Exchange.

Prices rose Tuesday on a growing belief that political leaders in Washington could soon reach a budget compromise to avert the series of spending cuts and tax increases that take effect on Jan. 1. The contract finished up 73 cents at $87.93 a barrel on the Nymex.

Some traders are now taking it for granted that a deal will be reached.

"I think people are looking past the fiscal cliff," said Chris Weston of IG Markets in Melbourne. "A good outcome in the fiscal cliff is largely priced in."

Brent crude, which is used to price international varieties of oil, rose 11 cents to $108.95 a barrel on the ICE Futures Exchange in London.

Capital Economics said oil prices were ending 2012 on a "lower note, partly due to fears over the 'fiscal cliff.' " Other factors that pointed to lower oil prices in 2013 are steady but not spectacular U.S. economic growth, and sluggish growth in Japan and Europe — which together use roughly the same amount of oil as the U.S.

"Elsewhere, growing demand from China and other emerging economies might cushion the downside, but we don't expect it to be enough to provide much of a lift," Capital Economics said in a market analysis.

Other energy futures on the New York Mercantile Exchange:

— Heating oil rose 0.1 cent to $2.995 a gallon.

— Natural gas fell 0.2 cents to $3.394 per 1,000 cubic feet.

— Wholesale gasoline rose marginally to $2.6930 a gallon.