NEW YORK (AP) — The price of oil rose 1 percent Friday as traders weighed a new debt deal in Europe and political bickering in the U.S. over looming tax increases and budget cuts.

U.S. benchmark crude rose 84 cents to close at $88.91 per barrel in New York. In London, Brent crude rose 47 cents to close at $111.23 per barrel. Natural gas continued to tumble on forecasts for a warm beginning to December. It fell 2.4 percent to close at $3.56 per thousand cubic feet and has dropped 5.5 percent since Tuesday.

German lawmakers approved further aid to Greece Friday, raising hopes that Europe will continue to slowly heal from its debt crisis. In the U.S. lawmakers reported no progress in talks to avoid a series of tax increases and spending cuts that economists say risk a recession if they go into effect at the start of next year.

If Europe emerges from its debt crisis, increased economic activity there could push up global oil demand. But a slower U.S. economy would reduce demand.

Traders still don't believe, though, that U.S. lawmakers will fail to come to a deal, said Bob Yawger, an analyst at Mizuho Securities USA. Even with Republican House Speaker John Boehner saying Friday that lawmakers were "almost nowhere" on reaching a compromise.

Oil had its first monthly gain since August, but is still trading below the 2012 average of $94.65 per barrel. The price wavered between $84 and $89 per barrel in November with few dramatic moves up or down. Analysts say oil would be even lower if not for events in the Middle East.

Julian Jessop, an analyst at Capital Economics in London, estimates that oil is priced $10 to $20 per barrel higher because of worries that the violence in the Middle East could spread and disrupt future oil supplies.

Oil supplies are relatively high and economies around the world are growing slowly. So demand for fuels to ship goods and for travel is weaker than expected.

Capital Economics estimates oil will average $80 per barrel next year, which would be the lowest level since 2010, when crude averaged $79.84.

U.S. retail gasoline prices dropped steadily — if slowly — in November. Friday the national average fell less than a penny to $3.40 per gallon, according to the Oil Price Information Service, AAA and Wright Express. That's 12 cents lower than at the start of the month.

The difference in prices around the country is wider than usual. Drivers in some Northeastern states are paying almost $4 per gallon on average because supplies remain tight in the aftermath of Superstorm Sandy, which closed refineries, pipelines and fuel terminals for a time in New York and New Jersey. In the Southeast and southern Midwest drivers are paying closer to $3 per gallon.

New York drivers are paying $3.88 per gallon, on average, the highest in the country behind Hawaii. Missouri drivers pay the least at $3.15 per gallon.

Natural gas prices are near where they were at the beginning of the month, though trading was volatile. Natural gas rose to nearly $4 per thousand cubic feet for the first time since September of 2011 on expectations of a cold winter and an increase in heating demand.

Then prices tumbled back down this week when forecasters said early December temperatures should be warm and the Energy Department reported that national supplies of natural gas grew at a time when usually they fall.

In other energy futures trading on the New York Mercantile Exchange:

— Heating oil finished unchanged at $3.06 per gallon.

— Wholesale gasoline finished unchanged at $2.73 per gallon.