Gasoline and heating oil rose on optimism that the White House is closer to a budget deal with House Speaker John Boehner.
Futures climbed as President Barack Obama lowered his tax revenue demand by $200 billion and offered to start tax rate increases at $400,000 in income instead of $250,000. Obama and Boehner are trying to avert more than $600 million in tax increases and spending cuts, the so-called fiscal cliff.
“The posturing is done and they’re really negotiating now,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “Both recognize what they can get for their sides and now the compromise phase in in.”
Gasoline for January delivery rose 3.63 cents, or 1.4 percent, to $2.6909 a gallon on the New York Mercantile Exchange, the highest settlement since Dec. 3. Gasoline reversed its loss for the year to gain 0.2 percent.
Heating oil for January delivery advanced 4.02 cents, or 1.4 percent, to $2.9965 a gallon, the highest settlement since Dec. 4, extending this year’s increase to 2.1 percent.
Boehner, leader of the GOP-controlled House, agreed last week to accept higher tax rates on annual household income above $1 million. Obama, a Democrat, moved off the $250,000 threshold he has used for five years and offered to change the cost-of- living calculation for Social Security.
Boehner said today he will push a “plan B” measure that will include tax increases on income of more than $1 million a year, while continuing to negotiate with the president. Boehner said he expects the legislation to be on the House floor by the end of the week.
“The market is feeling optimistic that something will get done before the end of the year and, once we get this fiscal cliff out of the way, we could get a big rally in commodities,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “A lot of funds got out of the market, not wanting to take a chance if there’s no deal before the end of the year.”
The average nationwide cost for regular gasoline sank 1.2 cents to a $3.236 a gallon, AAA said today on its website. That’s the lowest level since Dec. 27.
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