Oil prices jumped more than $2 a barrel Wednesday as commodity markets viewed the early return to Washington of U.S. President Barack Obama from his Hawaiian vacation as a positive development in the search for a deal to avert the so-called "fiscal cliff."
The benchmark West Texas crude price hit $91.05 US a barrel at 2:45 p.m. ET on the New York Mercantile Exchange — a two-month high. That represents a jump of $2.44 from the previous close and took the NYMEX price to a two-month high. The February contract subsequently settled at $90.98, up $2.37.
Bloomberg quoted technical analysts as saying the rise was also due, in part, to oil topping its 100-day moving average of $90.68 in light morning trading.
News of a potential extremist attack being thwarted in the United Arab Emirates was also seen as pressuring oil prices.
Obama's return to Washington is being viewed as a small but hopeful sign that he and Congress may finally be able to work out a compromise that would avert huge tax hikes and spending cuts that are due to automatically take effect on Jan. 1 unless action is taken.
So far, the White House and Republicans in Congress have been unable to fashion a deal.
Today's oil price rise represents a bit of a rebound for the commodity. Oil prices in North America have been comparatively weak lately as U.S. shale oil production booms. As recently as May, crude oil futures were trading at more than $105 a barrel.
At the same time, Canadian oilsands producers who export to the U.S. market have been seeing their oil selling at a huge discount to North Sea Brent — the international benchmark.
The average pump price for a litre of regular unleaded gas in Canada was $1.177 last week, according to Calgary-based MJ Ervin. That's near a one-year low.
U.S. retail gasoline prices fell to an average of $3.25 US per U.S. gallon, according to the U.S. Energy Department. That is a one-year low.
Natural gas futures for the January contract rose 4.6 cents to settle at $3.39.