NEW YORK (AP) -- The price of oil rose Wednesday as the government reported shrinking crude supplies, and some good news overseas offset concerns about political wrangling in Washington.
The Energy Department's Energy Information Administration said that the nation's crude oil supplies fell last week by a million barrels, about half of what analysts expected.
Oil prices also got a boost from a key survey measuring German business optimism. It showed slight improvement and was good news for Europe's largest economy.
Fiscal cliff negotiations continued in Washington. The White House threatened Wednesday to veto House Speaker John Boehner's so-called "Plan B" for avoiding the fiscal cliff, saying it was time for Republicans to stop political posturing and try to reach a compromise deficit-cutting package. President Barack Obama also said Wednesday that his administration was prepared to make tough choices to find a solution and there's no reason talks should fail.
Benchmark crude jumped $1.58, or about 1.8 percent, to finish at $89.51 per barrel in New York. That's the biggest one-day price rise in a month.
Meanwhile many Americans are feeling less pain at the pump as gas prices hit another year-low at a national average just under $3.23 a gallon, only a half-cent higher than a year ago.
In energy futures trading Brent crude, used to price international varieties of oil, rose $1.52 to end at $110.36 per barrel in London.
On the New York Mercantile Exchange:
-- Heating oil rose 4 cents to finish at $3.04 a gallon.
-- Natural gas fell 10 cents, or 2.9 percent, to end at $3.32 per 1,000 cubic feet after rising for two straight days.
-- Wholesale gasoline gained 5 cents to finish at $2.74 a gallon.
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