* New Greek debt target greeted with cautious optimism
* Uncertainty over U.S. budget negotiations weighs
* Coming Up: API weekly crude stocks; 2130 GMT
By Luke Pachymuthu
SINGAPORE, Nov 27 Brent crude rose above $111
per barrel on Tuesday as optimism coursed through financial
markets after Greece's international lenders reached a deal on a
new debt target, although worries about a looming U.S. fiscal
crisis kept a lid on gains.
The euro hit a one-month high and Asian shares climbed for a
seventh straight day after euro zone finance ministers and the
International Monetary Fund agreed on a package of measures to
reduce Greek debt needed to release another tranche of loans to
the near-bankrupt economy.
Brent crude was up 13 cents at $111.05 a barrel by
0301 GMT and U.S. crude gained 24 cents to $87.98,
following losses on Monday.
Oil prices were also supported by a softer dollar,
which makes commodities priced in the greenback cheaper for
holders of other currencies.
But traders cautioned that oil price gains may be checked as
the longer-term outlook for Europe remained uncertain.
"Markets for now are pricing in that Greece will be
refunded, but there are structural problems about the euro zone
that needs fixing," said Ben Taylor, sales trader at CMC Markets
"It's amazing how (Europe) keeps finding ways to buy
themselves more time. They've simply kicked the can down the
road for the moment."
Market attention is now expected to focus on the fiscal
policy standoff in the United States. A lack of progress on that
front will muddy the outlook for demand from the United States,
the world's top oil consumer.
Republicans in the U.S. Congress on Monday called on
President Barack Obama to detail long-term spending cuts to help
solve the country's fiscal crisis, while holding firm against
the income tax rate increases for the wealthy that Democrats
While Congress returned from its Thanksgiving holiday break
amid increasing talk about long-term tax reform plans and a need
to compromise, the two parties showed no signs yet of having
found a way around the short-term tax obstacle necessary to head
off the fiscal cliff on Dec. 31.
"If we do hit the fiscal cliff, the U.S. will dip back into
a recession which is not good for anyone," Taylor said.
The fiscal cliff's approximately $600 billion in tax hikes
and spending cuts that would begin in 2013 would push the U.S.
economy back into recession, according to the non-partisan
Congressional Budget Office.
"We do see markets, at least for now still pricing in some
kind of agreement to take place before the end of the year, but
we're going to have to see compromise from both parties."
The oil market is also keeping an eye on the political
crisis in Egypt that has triggered worries about supply.
President Mohamed Mursi provoked outrage last week that led
to violent protests when he issued a decree that put beyond
judicial review any decision he takes until a new parliament is
elected, drawing charges he had given himself the powers of a
Egypt's ruling Islamists tried to defuse the political
crisis on Monday, with Mursi backing a compromise over his
seizure of extended powers and his Muslim Brotherhood calling
off a planned demonstration.
But opponents plan to go ahead with a big demonstration on
Tuesday to demand he scrap the decree, threatening more turmoil
for a nation that has been stumbling towards democracy for
almost two years since president Hosni Mubarak was ousted.
News that OPEC member Nigeria is expected to see oil exports
drop to 1.98 million barrels per day in January from a planned
2.12 million bpd in December also supported crude.
Traders are now waiting for weekly U.S. inventory data due
out on Tuesday and Wednesday. Analysts forecast a build in crude
and refined product stockpiles for the week to Nov. 23.
(Editing by Himani Sarkar)