Brent climbs above $109 ahead of U.S. budget talks
* U.S. lawmakers likely to resume budget talks later this week
* Investors see last-minute deal, or at least a stop-gap
* New Japan PM to be sworn in, promises aggressive easing
By Jessica Jaganathan
SINGAPORE, Dec 26 (Reuters) - Brent crude climbed above $109 per barrel on Wednesday in thin trade a day after Christmas, with investors hoping for a last-minute deal to avoid a fiscal crisis in the United States, the world's largest oil consumer.
U.S. President Barack Obama may return to Washington from his Hawaiian holiday as early as Wednesday evening to address the unfinished "fiscal cliff" negotiations with Congress, ahead of a year-end deadline that would trigger harsh spending cuts and tax hikes.
Brent crude had gained 50 cents to $109.30 a barrel by 0249 GMT, after settling 17 cents lower on Monday before Christmas. U.S. crude increased by 46 cents to $89.07.
"The market is very thin, with global markets trading thinly since Christmas eve," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"There are not that many participants and thus it's easy to move markets up and down, so I don't think it's reflective of the actual market and it will probably move after the Europe market wakes up."
The next session of the U.S. Senate was set for Thursday, but the issues presented by the "fiscal cliff" of tax hikes and spending cuts scheduled to take effect next year were not on the calendar.
The U.S. House of Representatives has nothing on its schedule this week, but its members have been told they could be called back on 48 hours notice, making their Thursday return a theoretical possibility.
Some investors are now looking at a stop-gap that puts everything off for a while as the most promising alternative. Such a fix may help delay the spending cuts and tax hikes further into 2013 as well as work to address in a long-term way a budget that has generated deficits exceeding $1 trillion in each of the last four years.
Oil had slumped on Friday after the budget talks dissolved, but many investors doubt that lawmakers will risk the fragile U.S. economy tipping into recession again.
Investors also took direction from the equity markets where expectations that Japan's incoming prime minister will pursue drastic stimulus policies to drive the world's third largest oil consumer's economy out of deflation helped weaken the yen.
Shinzo Abe will be voted in as prime minister by parliament's lower house on Wednesday, giving the hawkish lawmaker a second chance at Japan's top job as the country battles deflation and confronts a rising China.
Abe, 58, has promised aggressive monetary easing by the Bank of Japan and big fiscal spending by the debt-laden government to slay deflation and weaken the yen to make Japanese exports more competitive.
"There were gains in the stock markets yesterday, so that might be a factor pushing up prices in the oil market as it catches up," Hasegawa said.
MIDDLE EAST VIOLENCE
Oil prices also found support on tensions in the Middle East.
International envoy Lakhdar Brahimi pursued mediation efforts in Damascus on Tuesday, but there was no pause in the bloodletting as Syrian Christians marked a bleak Christmas Day with prayers for peace.
More than 44,000 Syrians have been killed since a revolt against President Bashar al-Assad erupted 21 months ago.
Six U.S.-allied Gulf Arab states demanded on Tuesday that Iran end what they called interference in the region, reiterating a long-held mistrust of their main rival.
The Islamic Republic denies trying to subvert Saudi Arabia and its wealthy Gulf neighbours.
A communique issued at the end of a two-day summit of the Saudi-led Gulf Cooperation Council (GCC) also urged action to halt mass killings and violations of international law in Syria.
The oil-producing GCC states wield influence out of proportion to their sparse populations due in part to global energy and investment links, generous international aid and Saudi Arabia's role as home to Islam's two holiest sites. (Editing by Joseph Radford)
- Tweet this
- Share this
- Digg this
- Israel warns of long Gaza war as Palestinian fighters cross border
- Cricket - Moeen probed after sporting 'Save Gaza' wristbands
- West agrees wider Russia sanctions as Kiev says forces near crash site
- Israel extends Gaza ceasefire for 24 hours, Hamas rejects terms
- UPDATE 2-Consumer Reports wants Toyota to recall older Camry hybrids
Indian conglomerate Larsen & Toubro said on Monday revenue totalled 191.23 billion Indian rupees ($3.2 billion) in the first quarter, beating analyst forecasts, after a rise in orders from international clients. Full Article