The price of oil rose yes­ter­day on a grow­ing be­lief that po­lit­i­cal lead­ers in Wash­ing­ton could soon reach a com­pro­mise to head off the dread­ed "fis­cal cliff." Con­ces­sions on both sides of the aisle have spurred op­ti­mism that a deal will be reached to avert the se­ries of spend­ing cuts and tax in­creas­es that take ef­fect on Jan­u­ary 1, 2013.

But de­spite that progress, Pres­i­dent Barack Oba­ma and House Speak­er John Boehn­er are both still play­ing po­lit­i­cal hard­ball. On Tues­day morn­ing, Boehn­er said he is ready­ing a back­up bill aimed at avert­ing the "fis­cal cliff" be­cause the pres­i­dent has yet to of­fer a bal­anced pack­age of rev­enues and spend­ing cuts that would re­duce bur­geon­ing fed­er­al deficits.

The move is an at­tempt to give Re­pub­li­cans po­lit­i­cal cov­er if Wash­ing­ton fails to reach a deal. Many econ­o­mists be­lieve that a lack of ac­tion by the gov­ern­ment could steer the coun­try back in­to a re­ces­sion, which would damp­en the de­mand for en­er­gy.

Bench­mark crude fin­ished up 73 cents at US$87.93 a bar­rel on the New York Mer­can­tile Ex­change. Brent crude, which is used to price in­ter­na­tion­al va­ri­eties of oil, rose US$1.14 to US$108.78 a bar­rel on the ICE Fu­tures Ex­change in Lon­don.

Oth­er en­er­gy fu­tures on the New York Mer­can­tile Ex­change:

• Heat­ing oil rose 4 cents to US$3 a gal­lon.

• Nat­ur­al gas gained 6 cents to US$3.42 per 1,000 cu­bic feet.

• Whole­sale gaso­line added 4 cents to US$2.69 a gal­lon.

Mean­while, the price of gold fell yes­ter­day on ex­pec­ta­tions that law­mak­ers are clos­er to a bud­get agree­ment. Gold for Feb­ru­ary de­liv­ery fell US$27.50 to fin­ish at US$1,670.70 an ounce. With two weeks left to re­solve their dif­fer­ences, Pres­i­dent Barack Oba­ma and House Speak­er John Boehn­er made some con­ces­sions but held their ground on oth­er is­sues.

That cre­at­ed ex­pec­ta­tions that the two were mak­ing progress to­ward a com­pro­mise. If the two sides fail to reach an agree­ment be­fore Jan 1, tax in­creas­es and gov­ern­ment spend­ing cuts will take go in­to ef­fect, an out­come that has been dubbed the "fis­cal cliff." Some econ­o­mists be­lieve that could push the coun­try in­to a re­ces­sion.

A new bud­get will make it less like­ly that the Fed­er­al Re­serve will have to take ad­di­tion­al steps to pro­mote the econ­o­my. Such Fed mea­sures typ­i­cal­ly ben­e­fit gold, said Dave Meger, a vice pres­i­dent of met­als trad­ing at Vi­sion Fi­nan­cial Mar­kets. "The clos­er we get to some type of res­o­lu­tion takes away a bit of that pos­si­bil­i­ty and hence is ... less sup­port­ive of gold," he said.

In­dus­tri­al met­als al­so fell in part be­cause of the drop in gold prices. It al­so is the time of year when trad­ing is light in met­als, Meger said. In March con­tracts, sil­ver fell 61.1 cents to end at $31.669 an ounce, cop­per fell 1.25 cents to $3.6535 a pound and pal­la­di­um dropped $7.35 to $690.95 an ounce. Jan­u­ary plat­inum end­ed down $14.80 at $1,593.70 an ounce.

In oth­er trad­ing, soy­bean prices fell two per cent af­ter Chi­na and an­oth­er un­spec­i­fied coun­try can­celed pur­chas­es of more than 300,000 met­ric tons of US beans, an­a­lysts said. Mike Zu­zo­lo, pres­i­dent of Glob­al Com­mod­i­ty An­a­lyt­ics & Con­sult­ing LLC, spec­u­lat­ed that Chi­na placed an or­der for the beans when they were at a high­er price. It can­celed that or­der and like­ly will buy soy­beans at a low­er price, he said.

Soy­beans for Jan­u­ary de­liv­ery fell 30.25 cents to end at $14.66 a bushel, March wheat rose 3.25 cents to $8.1125 a bushel and March corn fell four cents to $7.20 a bushel.