By Myra P. Saefong and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) ? Crude-oil futures climbed Tuesday to touch a high above $88 a barrel as optimism that U.S. politicians would be able to strike a deal to avert the fiscal cliff and upbeat economic data buoyed prospects for oil demand.
How much to tax the rich?
As the high-stakes showdown over the fiscal cliff continues, Republicans and Democrats continue to debate how much the richest Americans should pay in taxes.
Crude oil for delivery in January /quotes/zigman/2291763 CLF3 +0.97% climbed 85 cents, or 1%, to $88.05 a barrel on the New York Mercantile Exchange, after trading as high as $88.16. Prices, which climbed 47 cents on Monday, haven?t closed above $88 since Dec. 4.
?The growing optimism in relation to a fiscal-cliff resolution is sweeping across broader markets, with energy commodities leading the charge,? said Matt Smith, commodity analyst at Schneider Electric, a Louisville, Ky.-based global specialist in energy management.
?Added optimism is being provided by signs of improvement in the housing industry, while tomorrow?s weekly inventory report is expected to yield a fourth [weekly] draw in five for crude stocks,? he said.
Oil market eyes fiscal-cliff negotiations.Tuesday?s advance in oil prices came as reports emerged of President Barack Obama and House Speaker John Boehner making progress on a bargain to avert the fiscal cliff ? expenditure cuts and tax hikes that are automatically set to kick in next year. Read about Where Obama and Boehner have backed down.
Boehner on Tuesday floated a back-up plan to raise taxes on incomes of $1 million and above. See: Boehner floats ?Plan B? as cliff deadline nears.
?It?s all about further strengthening in the beleaguered demand situation ? related to optimism that a compromise can be reached in the U.S. and increased optimism with regard to China,? said Matthew Parry, senior oil-market analyst at the International Energy Agency.
He is, however, also ?less optimistic on the global demand situation as a lot of [...] macroeconomic skeletons lurk in the shadows in 2013.?
But ?even if a compromise is reached in the U.S., which I think it will, I?m still not optimistic for substantial growth in U.S. oil demand prospects in 2013,? Parry said.
/conga/story/misc/investing.html 241308U.S. economic data was supportive for oil, as was weakness in the U.S. dollar.
A gauge of confidence among home builders rose in December to the highest level since April 2006. See: Home-builder confidence highest since 2006.
Also Tuesday, data showed that the U.S. current-account deficit fell sharply to reach its lowest level in nearly two years. See: U.S. current-account deficit shrinks again.
Meanwhile, the ICE dollar index /quotes/zigman/1652083 DXY -0.38% , which measures the greenback against a basket of six other major currencies, was at 79.312, down from 79.557 in North America late Monday.
Other energy futures traded broadly higher. January gasoline /quotes/zigman/1893822 RBF3 +1.56% ?climbed 5 cents, or 1.7%, to $2.70 a gallon, and January heating oil /quotes/zigman/2101429 HOF3 +1.64% ?added 5 cents, or 1.6%, to $3.00 a gallon.
Natural gas for January delivery /quotes/zigman/2294433 NGF13 +0.83% tacked on 6 cents, or 1.7%, to $3.42 per million British thermal units. It rose 1.3% Monday after a seven-session decline.
Late Tuesday, the American Petroleum Institute will release its data on U.S. petroleum supplies covering the week ended Dec. 7. More closely-watched data from the Energy Information Administration comes out Wednesday morning. Analysts polled by Platts expect a 2.3 million-barrel decline in crude-oil supplies. They forecast a rise of 2 million barrels in gasoline inventories and a climb of 1.5 million barrels in distillate supplies.
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Volume: 40,027
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/quotes/zigman/1893822 US : U.S.: Nymex
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/quotes/zigman/2101429 US : U.S.: Nymex
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/quotes/zigman/2294433 US : U.S.: Nymex
Volume: 71,448
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Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
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