Oil climbed for a third day in New York on prospects of a budget deal

With there being evident indication that a budget deal will likely be reached in Washington, oil climbed for a third Day in New York on Tuesday; with crude-oil futures touching $88 per barrel.

In the wake of reports that automatic spending cuts and tax increases in 2013 will apparently be avoided as US politicians will likely reach a budget agreement to avert the fiscal cliff, prospects for oil demand climbed for the third consecutive day on Tuesday.

Oil prices saw a 1 percent gain after House Speaker John Boehner - who was earlier against any increase in tax rates for any income level - proposed to increase tax rates on household's with annual income of more than $1 million, in exchange for restraining entitlement program costs.

The prospects of a budget deal led to a 73-cent - or 0.8 percent - rise in crude oil for January delivery which finally settled at $87.93 per barrel on the New York Mercantile Exchange on Tuesday, after having traded for as high as $88.16 per barrel. The Tuesday figures underscore that oil prices have now tallied a 2.3 percent gain in three sessions.

About the Tuesday advance in oil prices, commodity analyst Matt Smith - from Louisville, Ky.-based Schneider Electric, a global expert in energy management - said: "The growing optimism in relation to a fiscal-cliff resolution is sweeping across broader markets, with energy commodities leading the charge."