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Oil up slightly on Europe debt deal

The Associated Press

The price of oil rose slightly Friday as traders weighed a new debt deal in Europe against political bickering in the U.S. over looming tax increases and budget cuts.

U.S. benchmark crude rose 34 cents to $88.41 per barrel in New York at midday. In London, Brent crude fell 13 cents to $110.63 per barrel.

German lawmakers approved further aid to Greece Friday, raising hopes the European debt crisis may begin to wane. But in the U.S. lawmakers reported no progress in talks to avoid a series of tax increases and spending cuts that economists say could drag the U.S. economy into recession if they go into effect at the start of next year.

If Europe emerges from its debt crisis, increased economic activity there could push up global oil demand, but a slower U.S. economy would reduce demand.

Oil prices wavered between $84 and $89 per barrel in November with few dramatic moves up or down during the month. Though oil is on track for its first monthly gain since August, it is trading below the 2012 average of $94.65 per barrel.

Analysts say prices would be much lower than that if it were not for violence and unrest in the Middle East.

Julian Jessop, an analyst at Capital Economics in London, estimates that oil is priced $10 to $20 per barrel higher because of worries that the violence in the Middle East could spread and disrupt future oil supplies.

Oil supplies are relatively high and economies around the world are growing slowly. So demand for fuels to ship goods and for travel is weaker than expected.

Capital Economics estimates oil will average $80 per barrel next year, which would be the lowest level since 2010, when crude averaged $79.84.

U.S. retail gasoline prices dropped steadily — if slowly — in November. Friday the national average fell less than a penny to $3.40 per gallon, according to the Oil Price Information Service, AAA and Wright Express. That's 12 cents lower than at the start of the month.

The difference in prices around the country is wider than usual. Drivers in some Northeastern states are paying almost $4 per gallon on average because supplies remain tight in the region in the aftermath of Superstorm Sandy, which closed refineries, pipelines and fuel terminals for a time in New York and New Jersey. In the Southeast and southern Midwest drivers are paying closer to $3 per gallon.

New York drivers are paying $3.88 per gallon, on average, the highest in the country. Missouri drivers, at $3.15 per gallon, pay the least.

Natural gas prices are almost exactly where they were at the beginning of the month, though trading was volatile in November. Natural gas rose to nearly $4 per thousand cubic feet for the first time since September of 2011 on expectations of a cold winter that would increase heating demand.

Then prices tumbled back down this week when forecasters predicted a warm early December and the Energy Department reported that national supplies of natural gas grew at a time when usually they fall.

On Friday natural gas fell 6 cents to $3.59 per thousand cubic feet.

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

— Heating oil was unchanged at $3.06 per gallon.

— Wholesale gasoline was unchanged at $2.73 per gallon.