By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) — Oil futures rose above $88 a barrel on Wednesday, buoyed by hopes of a U.S. budget deal as well as data showing a sharp decline in weekly crude inventories.
Crude oil for January delivery CLF3 +0.42% gained 47 cents to $88.40 a barrel on the New York Mercantile Exchange.
The contract expires after trading closes on Wednesday.
Oil prices were buoyed after data from the American Petroleum Institute late Tuesday showed oil supplies fell by 4.1 million barrels last week.
The Energy Information Administration will release its inventory report on Wednesday. Analysts polled by Platts expect a 2.3-million-barrel decline in crude-oil supplies, a rise of 2 million barrels in gasoline inventories and a climb of 1.5 million barrels in distillate supplies.
January oil futures rose on Tuesday for the third straight session following optimism that the fiscal cliff of tax and spending measures will be resolved and the U.S. economy will not be plunged into another recession.
Those hopes carried over into Wednesday trading, boosting assets perceived as riskier, such as stocks and commodities, while hurting safe-haven assets, such as the U.S. currency.
The dollar index DXY -0.28% , which tracks the performance of the greenback against a basket of other major currencies, dropped to 79.068 from 79.349 in North American trade late Tuesday.
In other energy trading, January gasoline futures RBF3 +0.78% gained 2 cents to $2.71 a gallon and January heating-oil futures rose 3 cents to $3.02 a gallon.
Natural gas for January delivery NGF13 -3.01% fell 11 cents, or 3%, to $3.31 per million British thermal units.
Polya Lesova is MarketWatch's New York deputy bureau chief. Follow her on Twitter @PolyaLesova.
