The Dow Jones Industrial Average surged 200 points today and oil prices spiked more than a dollar after Congress approved a bipartisan budget deal to avoid the "fiscal cliff."
That’s according to the Associated Press, which tweeted this morning that markets rallied and energy prices spiked as a result of the deal.
By early afternoon in Europe, benchmark crude for February delivery was up $1.49, to $93.31 a barrel, in electronic trading on the New York Mercantile Exchange, the AP reported. The contract rose $1.02, to finish at $91.82 a barrel, in New York on Monday.
Economists had warned that if Congress did not take action a series of tax increases and spending cuts set to automatically start this year could have helped push the United States back into a recession. They feared a spike in unemployment, which would have resulted in depressed demand for energy.
Some House Republicans at first opposed the bill, which neutralizes middle-class tax increases and $24 billion in spending cuts set to take effect during the next two months while raising taxes on the wealthy. They wanted more spending cuts, but hours later they agreed to a simple yes-or-no vote on the bill, which the Senate had passed.
As a result of a broad increase in market sentiment, the dollar weakened as investors felt confident to invest in relatively riskier assets. A weaker dollar makes crude oil cheaper and a more attractive investment for traders using other currencies. The euro rose to $1.3280 today from $1.3213 on Monday, the previous trading session.
Brent crude, used to price various kinds of international oil, was up $1.12, to $112.23 a barrel, on the ICE Futures exchange.
Wholesale gasoline rose 3.88 cents, to $2.8005 a gallon, and heating oil added 2.62 cents, to $3.058 a gallon.