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Oil rises on housing data, 'fiscal cliff' talks

The Associated Press

NEW YORK (AP) -- The price of oil rose sharply Wednesday on higher U.S. home prices and hopes of a budget deal in Washington.

U.S. benchmark crude jumped $2.37, or 2.7 percent, to finish at $90.98 per barrel in thin post-Christmas trading in New York.

U.S. home prices rose in most major cities in October compared with a year ago, according to a key report. The improvement is adding to economic growth, which generally boosts energy consumption and lifts prices.

President Barack Obama will return to Washington Thursday after a brief vacation to resume budget talks with Congress. Negotiations are aimed at avoiding the "fiscal cliff," the deep budget cuts and tax increases that could slow U.S. growth.

While traders and investors kept an eye on the economy and the fiscal cliff, analysts noted that light trading volume around the holidays can mean broad swings in crude prices.

"We've got a very, very thin trade," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "It doesn't really take much buying to spike it."

Meanwhile, prices at the pump held steady at a national average of $3.25 a gallon. Gasoline was at its lowest price for the year last Thursday, at an average of $3.22 a gallon.

In London, Brent crude, used to price a various kinds of foreign oil, rose $2.27 to end at $111.07 per barrel.

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

--Heating oil rose 5 cents to finish at $3.05 a gallon.

--Wholesale gasoline rose 7 cents to end at $2.82 a gallon.

--Natural gas rose 5 cents to finish at $3.39 per 1,000 cubic feet.