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Oil rose, heading for its first monthly gain since August, on signals U.S. economic expansion is accelerating, while investors weighed developments in government budget negotiations.
Futures climbed as much as 0.8 percent after the MNI Chicago Report’s business barometer showed activity in the U.S. grew in November for the first time in three months. Democrats and Republicans are holding talks in Washington to avoid more than $600 billion in spending cuts and tax increases known as the fiscal cliff. They are due to kick in next year.
The MNI Chicago Report’s business barometer rose to 50.4 in November from 49.9 the prior month. A reading of 50 is the dividing line between expansion and contraction.
Congressional Republicans rejected President Barack Obama’s tax-and-spending proposal. The plan calls for $1.6 trillion in tax increases and $400 billion in unspecified cuts.
Republicans complained that Obama’s offer was little more than a rehash of old budget proposals, setting the stage for more contentious negotiations over the next several weeks.
Oil surged earlier this month amid eight days of fighting between Israel and Hamas, which controls the Gaza Strip, before the two sides signed a Nov. 21 truce agreement. Protests erupted in Egypt after President Mohamed Mursi issued a Nov. 22 decree that prevents his actions from being challenged by the courts.
The Middle East and North Africa accounted for about 40 percent of the world’s petroleum output last year, according to BP Plc (BP/)’s Statistical Review of World Energy.
Crude oil for January delivery climbed to $88.79 a barrel on the New York Mercantile Exchange. Futures are up 0.5 percent this week and are 2.8 percent higher this month. Prices are down 10 percent this year.
Brent oil for January settlement rose 32 cents, or 0.3 percent, to $111.08 a barrel on the London-based ICE Futures Europe exchange.
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