Dec 13, 2012 1 min read

NEW YORK — The price of oil is ending lower Thursday as doubts increased over political leaders’ ability to strike a deal in budget negotiations.

Benchmark crude was down 88 cents to $85.89 per barrel in New York.

Enthusiasm over the U.S. Federal Reserve’s plan to boost the economy, announced Wednesday, is being replaced by fears that President Barack Obama and Republican leaders were as far apart as ever on reaching a budget deal before year’s end. Without an agreement, significant tax increases and government spending cuts will automatically take effect. That so-called “fiscal cliff” could pull the U.S. economy into recession, likely hurting demand for energy.

The average gas price across the U.S. dropped to $3.30 a gallon, the lowest point since July 3.