NEW YORK (AP) — Worries over the looming "fiscal cliff" and the health of the U.S. economy are driving oil prices lower Tuesday.
U.S. lawmakers have less than a month to reach a compromise to avoid a series of sharp tax increases and spending cuts that take effect in January. Proposals from the White House and Republicans in Congress have so far not brought a deal closer.
And on Monday, there were signs that the lack of a deal may be affecting the economy. U.S. manufacturing shrank in November to its weakest level since July 2009, the Institute of Supply Management said, brought on by the impact of Superstorm Sandy and uncertainty about taxes and government spending cuts.
In Tuesday afternoon trading, benchmark crude was down 53 cents to $88.56 a barrel in New York.
At the pump, gasoline lost less than a penny overnight to reach a national average of $3.38 a gallon, according to AAA, Wright Express and the Oil Price Information Service. That's down almost four cents in a week but a dime higher than a year ago.
Brent crude, which is used to price international varieties of oil, lost $1.14 to $109.78 on the ICE Futures exchange in London.
Other futures on the New York Mercantile Exchange:
— Heating oil fell 5 cents to $3.01 a gallon.
— Natural gas lost 3 cents to $3.57 per 1,000 cubic feet.
— Wholesale gasoline fell 3 cents to $2.69 a gallon.
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